Skip to main content

Full text of "The control and distribution of production"

See other formats


THE CONTROL 
DISTRIBUT 





C.H, 



Digitized by the Internet Arciiive 

in 2007 witii funding from 

IVIicrosoft Corporation 



littp://www.arcli ive.org/details/controldistributOOdouguoft 



THE CONTROL AND 

DISTRIBUTION OF 

PRODUCTION 



Major C. H, Douglases Works 

ECONOMIC DEMOCRACY. By Major C. H. 
Douglas. Second and Revised Edition. Crown 
8vo, cloth. 6s. net. 

CREDIT POWER AND DEMOCRACY: 
With a Draft Scheme for the Mining 
Industry. By Major C. H. Douglas. With 
a Commentary on the included Scheme by A. H. 
Grace. Second and Revised Edition. Crown 
8vo, cloth. 7s. 6d. net. 

THE DOUGLAS THEORY: A Reply to 
Mr J. A. Hobson. By Major C. H. Douglas. 
Crown 8vo, sewed. 6d. net. 



Books and Pamphlets on the same Subject 

DIVIDENDS FOR ALL: Being an Explana- 
tion of the Douglas Scheme. By W. Allen 
Young. Crown Svo, sewed. 6d. net. 

IT'S LIKE THIS . . . By N. D. S. Crown Svo, 
sewed. 6d. net. 

Dealing with the Douglas New-Age Scheme, this story of an 
imaginary island will put you in touch with the idea. You see, it's 
like this . . . 

A NEW POLICY FOR LABOUR : An Essay 
on the Relevance of Credit Power. By 

HiLDERic CousENS. Crown Svo. 5s. net. 

A book designed to be a topical introduction to the ideas, 
economic and social, of Major C. H. Douglas. 

UNEMPLOYMENT. The Cause and a 
Remedy. By Arthur Kitson. Crown Svo. 
5s. net. 

LONDON: CECIL PALMER 

Oakley House, Bloomsbury Street, W.C.i 



THE CONTROL AND 

DISTRIBUTION OF 

PRODUCTION 

BY 

Major C. H. DOUGLAS, M.I., Mech.E. 

AUTHOR OF "credit POWER AND DEMOCKACY," 

"economic democracy," KTC. 




LONDON 

CECIL PALMER 

OAKLEY HOUSE, BLOOMSBURY STREET, W.C.I 

1922 



111 
• 7 
VI 



F I R S,T 
EDITION 
1922 
COPY- 
RIGHT 




PREFACE 

Certain of the chapters in this volume were 
first delivered as lectures before the Socio- 
logical Society, the Euskin College at Oxford 
and the National Guilds League ; whilst the 
others appeared in the pages of The New 
Age and The English Review, for which full 
acknowledgment for permission to reprint 
them here is made to their respective Editors. 



It 



CONTENTS 

PAGE 

l. The Mechanism of Consumer Control . if 



Xlll. A V^OMMENTAKlt wrt .'"• 

XIV. "The Moving Finger writes 



166 



EERATA 

On Page 18, the second line from the 
bottom, the word " and " should he " any." 

On Page 73, line 7 from the top, for the 
word " depreciation " read " production." 



CONTENTS 



CHAPTER PAGB 

I. The Mechanism of Consumer Control . 9 



II. The Control of Policy in Industry 

III. The Control of Production . 

IV. A Mechanical View of Economics . 
V. Production and Prices 

VI. What is Capitalism ? . . . 
VII. The Question of Exports 
VIII. Unemployment and Waste 
IX. A Commentary on World Politics (I) 
X. A Commentary on World Politics (II) 
XI. A Commentary on World Politics (III) 
XII. A Commentary on World Politics (IV) 

XIII. A Commentary on World Politics (V) 

XIV. " The Moving Finger writes ..." 



34 
51 
56 
63 

74 

82 

88 

95 

109 

125 

143 

153 

166 



The Control and Distribution 
of Production 

CHAPTEK I 

THE MECHANISM OF CONSUMER CONTROL 

No doubt to some members and guests of 
this Society much of the subject with which 
we are concerned to-night will be elementary, 
even if the method of approach to it is some- 
what novel ; but to others to whom the subject 
of Finance, which is an important component 
of it, is a mysterious and incomprehensible 
jungle, through which they feel they could 
never hope to find a way, I would make the 
following suggestions. 

Money is only a mechanism by means of 
which we deal with things — it has no properties 
except those we choose to give to it. A phrase 
such as " There is no money in the country 
with which to do such and so " means simply 
nothing, unless we are also saying " The goods 
and services required to do this thing do not 

9 



THE CONTROL AND 



exist and cannot be produced, therefore it 
is useless to create the money equivalent of 
them." For instance, it is simply childish to 
say that a country has no money for social 
betterment, or for any other purpose, when it 
has the skill, the men and the material and 
plant to create that betterment. The banks 
or the Treasury can create the money in five 
minutes, and are doing it every day, and have 
been doing it for centuries. 

Secondly, you will hear a good deal to-night 
about credit, and I would ask you to bear 
most consistently in mind the two following 
definitions : — 

Real credit is a correct estimate of the rate, 
or dynamic capacity, at which a community 
can deliver goods and services as demanded. 

Financial credit is ostensibly a device by 
which this capacity can be drawn upon. It is, 
however, actually a measure of the rate at 
which an organisation or individual can deliver 
money. The money may or may not represent 
goods and services. 

I would also ask you to realise that the 
validity of the criticisms passed on the existing 

10 



DISTRIBUTION OF PRODUCTION 

financial system does not rest to any con- 
siderable extent on the personal character, or 
the good or bad motives, of financiers. The 
motives of both sides of the Irish question, 
for example, may be of the most lofty, for all 
that I know to the contrary, and no one would 
suggest that there are not charming men on 
both sides ; but one can hardly say that the 
result of their policy is happy, and that either 
side can be allowed to pursue a policy having 
such results, indefinitely, and the same line 
of reasoning can be applied to the existing 
financial system. 

Before dealing with the subject described by 
the title of this address, I would therefore beg 
your indulgence for a short space of time in 
order to review briefly certain premises funda- 
mental to the subject ; because it has been 
found that even people very familiar with 
these matters are apt to raise vigorous objec- 
tions which are really based on other and in- 
consistent premises unless they are placed in 
the limelight at once, and, as far as possible, 
simultaneously. If you disagree with these 
premises, you will of course disagree with our 

11 



THE CONTROL AND 



9 



conclusions, but if you agree, and still dislike 
the conclusions, I hope you will tell us where 
the hiatus occurs and suggest another solu- 
tion based on them. 
Categorically, they are as follows :— 

1. Modern co-operative industry (all 
modern industry is co-operative) serves two 
purposes : it makes goods, and_ distributes 
purchasing power by means of which they are 
distributed. 

2. The primary object of the overwhelming 
majority of persons who co-operate in industry 
is to get goods with a minimum of discomfort, 
both of the right description, " right " being 
a matter of individual taste, and in the right 
quantity. It is not " employment," and it is 
only " money " in so far as money is a means 
to these things. 

If the system fails to achieve this end, it 
fails in its primary object and will break up, 
from the failure of the majority to co-operate. 

3. If we insist that the distribution of the 
goods is entirely (Marxist) or chiefly (Capital- 
istic) dependent on the doing of work in con- 
nection with the production of them, then it 

12 




DISTRIBUTION OF PRODUCTION 

follows that either (a) it takes all the avail- 
able labour to provide the requisite amount 
of goods, or (6) an increasing number of 
persons cannot get the goods, or (c) goods or 
labour must be misapplied or wasted, purely 
for the purpose of distributing purchasing 
power. 

We know that {a) is not true. If it were, the 
whole of modern progress would be a mere 
mockery. But, on the contrary, it is quite 
indisputable that, apart from many other 
factors making for real progress, production 
is practically proportionate to the dynamic 
energy applied to it, and the means developed 
during the past century by which solar dynamic 
energy (steam, water, oil-power, etc.) has been 
made available to the extent of thousands of 
times that due to human muscular energy 
(which yet, previous to this development, was 
able to secure for humanity a standard of life 
in many ways more tolerable than that existing 
to-day) is sufficient basis for such an assertion. 
Speaking as a technical man, I have no hesita- 
tion in saying that it is the programme of 
production and not the productive process 

13 



THE CONTROL AND 



\^ 



which is chiefly at fault, and that where the 
productive process is working badly it is 
because of the inclusion of unnecessary labour 
in it. 

(b) and (c) are true, as matters of both 
common and expert observation. 

4. The system under which the whole of 
the world, not excluding Russia, carries on 
the production and distribution of goods and 
services is commonly called the Capitalistic 
system, which system, contrary to general 
opinion, has nothing, directly, to do with the 
relations of employers and employed, which 
are administrative relations. The fundamental 
premises of the Capitalistic system are, first, 
that all costs (purchasing power distributed 
to individuals during the productive process) 
should be added together, and recovered from 
the public, the consumer, in prices ; and, 
second, that over and above that the price of 
an article is what it will fetch. 

If you will give the foregoing premises your 
careful consideration, you will see that the 
existing economic system is breaking up, not 
so much from the attacks on it, which, on the 

14 




DISTRIBUTION OF PRODUCTION 

whole, are neither very intelligent, nor very 
well directed, but because of the inherent in- 
compatibility of its premises with the objective 
of industry and modern scientific progress as 
a whole. 

The latter, taking the objective of industry 
as it finds it, endeavours, and fundamentally 
succeeds, in obtaining that objective with an 
ever-decreasing amount of human energy, by 
shifting the burden of civilisation from the 
backs of men on to the backs of machines ; 
a process which, if unimpeded, must clearly 
result in freeing the human spirit for conquests 
at the moment beyond our wildest dreams. 

The existing economic system, on the con- 
trary, ably backed by the Marxian Socialist, 
takes as its motto that saying which I cannot 
help thinking proceeded rather from Saul of 
Tarsus than from the Apostle of Freedom — 
" if a man will not work, neither shall he eat " 
— and defining work as something the price of 
which can be included in costs and recovered 
in price. 

It completely denies all recognition to the 
social nature of the heritage of civilisation, and 

15 



THE CONTROL AND 



by its refusal of purchasing power, except on 
terms, arrogates to a few persons selected by 
the system and not by humanity, the right to 
disinherit the indubitable heirs, the individuals 
who compose society. 

May I emphasise this fact before passing on 
to more concrete arguments ? — if wages and 
salaries, forming a portion of costs, and re- 
appearing in prices, are to form the major 
portion of the purchasing power of Society, 
then modern scientific progress is the deadly 
enemy of Society, since it aims at replacing 
the persons who now obtain their living in this 
way, by machines and processes. 

The prevalent assumption that human work 
is the foundation of purchasing power has more 
implications than it is possible to emphasise Jl 
to-night ; it is the root assumption of a world- 
philosophy which may yet bring civilisation 
to its death-grapple; but one result of it is 
that a man and a machine are, in the eyes of 
a cost-accountant, identical to the extent that 
both are an expense, a cost which must re- 
appear in price, the man, however, being at 
this disadvantage as compared with a machine, 

16 



II 



DISTRIBUTION OF PRODUCTION 

that he has to bear his own maintenance and 
depreciation charges. Costs are a dispensation 
of purchasing power ; and whether you are 
disciples of the " Cost " theory of prices, or of 
the " Supply and Demand " theory, you must 
admit that Capitalistic prices cannot be less 
than cost, over any considerable period of 
time. 

If, therefore, a portion of the " costs " of 
production are allocated to machines, and yet 
reappear in ultimate prices, it is obvious that 
the costs (purchasing power) in individual 
hands are not sufficient to pay these prices. 

I do not wish to pursue at great length this 
aspect of the subject to-night, because it has 
been elaborated in considerable detail in print 
and does not lend itself to platform discussion. 
But one consideration must be mentioned — 
the effect on the prices of ultimate products 
— those consumed by individuals — of the 
production of intermediate products — tools, 
factories, raw materials, etc. While, as has 
just been suggested, the flow of purchasing 
power to individuals through the media of 
wages, salaries, and, it may be added, dividends, 
B 17 



THE CONTROL AND 



0^ 



is not sufficient to buy the total price-values 
created in the same time, it must be remem- 
bered that a great and increasing quantity of 
the total production of the world is not bought 
by individuals at all — it is bought and paid for 
by organisations, national or otherwise, and is 
of no use to individuals. 

Now the costs of this production represent ef- 
fective demand to individuals ; and the second 
postulate of the present economic system is 

,, , . effective demand 

that average price = ^r-- — =; r- 

° goods m demand. 

Consequently, the more of these intermediate 

products we produce, under the present system, 

the higher rise the prices of goods for individual 

consumption ; which is the reason why the cry 

for indiscriminate super-production is both 

inane and mischievous. You will see at once 

that if the above formula for price, under the 

so-called law of supply and demand, is correct, 

which I suppose is not disputed, then it is really 

immaterial whether more or less goods are 

made, and more or less money distributed — 

and quantity of goods less than sufficient will 

absorb all the money available. And because 

18 



DISTRIBUTION OF PRODUCTION 

the Capitalistic incentive to production is 
money, production stops when there is no 
more money. 

You will see that, firstly, the existing 
system does not distribute the control of 
intermediate production to individuals at all ; 
and, secondly, gives them no say whatever as 
to the quantity, quality or variety of ultimate 
products. 

The distribution of purchasing power 
through the agency of the present volume of 
wages, salaries and dividends thus fails to 
distribute the product ; and since when dis- 
tribution stops production stops, the system 
would appear quite unworkable. 

But we know, as a matter of observation, 
that, although the grinding and groaning of the 
machine is plainly audible evidence that it is 
working very badly, it is working, and there 
must be something to account for the fact 
that distribution of a sort does take place. 
There are two things : export credit and loan 
credit. 

Now I may say at once that I do not see how 
it is possible to conceive of an economic system 

19 



THE CONTROL AND 



capable of dealing with the modern productive 
system in which this credit factor in the total 
sum of purchasing power does not play a pre- 
ponderating and increasing part. It is far 
better to arrive at conclusions of this sort 
inductively rather than deductively, and I 
will simply direct your attention to the present 
trade position in this country and in America. 
There is the plant ; there is the raw material ; 
there is labour ; and there is real, though not 
effective, demand ; but production is decreas- 
ing along a very steep curve. 

"Why ? I do not suppose anyone here to- 
night is guileless enough to believe that it is 
all the fault of Labour. It would do the Labour 
extremists all the good in the world, and might 
modify their policy, if they could be brought 
to realise that Labour, while a necessary factor 
in production, is less and less a determining 
factor. The success of the various dilution 
measures carried through under the stress of 
war is quite convincing proof of that fact. 

Nor is it Capital, in the ordinary sense of 
the word. A man who has sunk large sums 
of money in a manufacturing plant wants to 

20 



I 



DISTRIBUTION OF PRODUCTION 

manufacture, if lie can, because otherwise his 
plant is a dead loss to him. 

There is no doubt whatever, and I do not 
suppose that anyone at all familiar with the 
subject would dispute the statement for a 
moment, that the present trade depression ^ is 
directly and consciously caused by the con- 
certed action of the banks in restricting credit 
facilities, and that such credit facilities as are 
granted have very little relation to public 
need ; that, whatever else might have happened 
had this policy not been pursued, there would 
have been no trade depression at this time, 
any more than there was during the war ; 
and that the banks, through their control of 
credit facilities, hold the volume of production 
at all times in the hollow of their hands. You 
will, of course, understand that no personal 
accusation is involved in this statement ; the 
banks act quite automatically according to 
the rules of the game, and if the public is so 
foolish as to sanction these rules I do not see 
why it should complain. 

I should like, however, to emphasise this 

1 1921 

21 



THE CONTROL AND 



point : if the civilised world continues to 
permit this centralised, irresponsible, anti- 
public control of tbe life-blood of production 
to continue, and at tbe same time the possibly 
well-meaning but ill-informed and dogmatic 
Syndicalist makes good what is in essence 
exactly the same claim in the administrative 
field, then the world, in no considerable time, 
will be faced with a tyranny besides which the 
crude efforts of the Spanish Inquisition may 
well retire into insignificance. 

Let me repeat — the only true, sane origin of 
production is the real need or desire of the 
individual consumer. If we are to continue to 
have co-operative production, then that pro- 
ductive system must be subject to one con- 
dition only — that it delivers the goods where 
they are demanded. If any men, or body of 
men, by reason of their fortuitous position in 
that system, attempt to dictate the terms on 
which they will deliver the goods (not, be it 
noted, the terms on which they will work), 
then that is a tyranny, and the world has 
never tolerated a t3rranny for very long. 

There is, I think, a widespread idea that 



i 



DISTRIBUTION OF PRODUCTION 

if agitators would only stop agitating, and 
reformers stop trying to reform, the world 
would settle down. For myself, I am quite 
convinced that both agitation and reformism 
are merely symptoms of a grave and quite 
possibly fatal disease in our social and economic 
system, and that unless an adequate remedy 
is administered there will be an irreparable 
breakdown. I am emphasising this lest any- 
one should imagine that mere laissez-faire or, 
on the other hand, a vigorous suppression of 
symptoms is all that is necessary to cause 
things to " come right." 

The roots of this disease, then, are as follows : 

1. Wages, salaries, and dividends will not 

purchase total production. This diffi- il' 
culty IS cumulative. '* 

2. The only sources of the purchasing power' 

necessary to make up the difference are 
loan and export credits. 

3. All industrial nations are competing for 

export credits. The end of that is war. 

4. The major distribution of purchasing 

power to individuals is through the 
media of wages and salaries. The 
23 



THE CONTROL AND 



preponderating factor in production is 
improving process and tlie utilisation 
of solar energy. 
6. This latter tends to displace wages and 
salaries and tlie consequent distribu- 
tion of tlie product to individuals. 
The credit factor in purchasing power 
thus increases in importance and 
dominates production. 

6. This production is consequently of a 
1 character demanded by those in con- 
trol of credit and is capital production. 

7. The fundamental derivation of credit is 
j from the community of individuals, 
1 and because individuals are ceasing to 
' benefit by its use it is breaking down. 

If you have followed me so far you will see 
that there are two main and increasing defects 
in the present system — it makes the wrong 
things and so is colossally wasteful, and it 
does not satisfactorily distribute what it does 
make. The key to both of these is the 
control of credit. 

I should like to direct your attention to 
the meaning which can be attached to the 

24 




DISTRIBUTION OF PRODUCTION 

word ''control." We talk about the "public" 
control of this, that or the other. Is there 
any person in this room who has ever met the 
public, or knows in any clear-cut, tangible 
fashion, this alleged entity, the public, or 
really — if he or she is honest in the use of 
words — cares a broken rush about the public ? 
Is it the public which wants better houses, 
better food, a wider life ? I think not. When 
there is " unemployment " it is John Smith, 
Jane Smith and the Little Smiths who experi- 
ment with rationing. When there is a war 
it is Private, Lieutenant or Colonel Smith who 
loses an arm or whose wife places a wreath on 
the Cenotaph. I have not noticed that the name 
of the Public appears in the casualty lists of 
any of the nations engaged in the late war. 

I do not suggest for a moment that there is 
not a real group-consciousness — I think that 
there is such a consciousness. But the ills 
from which we are suffering do not take effect 
on that plane of consciousness, they take effect 
on individuals ; and if, as I have tried to 
indicate, the key to the solution of those ills 
is to be found in a modified control of credit, 

25 



THE CONTROL AND 



then that modification must be in favour of 
individuals. We can, I think, safely leave the 
group-consciousness to look after itself. 

The problem, then, is to give to individuals 
such personal control of credit as will enable 
each of them, for himself or herself, to get from 
the machine of civilisation those things, now 
lacking, to the extent that the machine is 
capable of meeting the demand, and the answer 
is almost childishly simple — it is contained in 
the proposition that he ought to be able to buy 
those things with the money at his disposal, 
and that if he does not want to buy them, then 
he should not be made to pay for them. 

If you will consider this matter in the light 
of everyday conditions in the world of business, 
you will find that the practical steps necessary 
to embody these principles in a practical 
mechanism resolve themselves into two groups 
— the control in the interest of the consumer 
of the credit issued to manufacturers, in order 
that those things shall be made which the 
ultimate consumer wants made — because the 
ultimate consumer should be the sole arbiter 
of the policy of production, though not con- 

26 



DISTRIBUTION OF PRODUCTION 

cerned with the processes by which his policy 
is materialised ; and, secondly, that the credit, 
or purchasing power, in the hands of the con- 
sumer shall be adequate to enable him, if 
necessary, to draw on the maximum resources 
of the productive organisation ; otherwise, it 
is clear, a part of those resources is ineffective. 

As we have previously noticed, individuals 
in the modern world obtain their purchasing 
power through three sources — wages, salaries 
and dividends. This purchasing power is 
taken away from them through the medium of 
what we call prices, and it will be quite obvious 
to you that the first thing necessary is to make 
total purchasing power equal to total prices, 
a proposition which has no other known 
solution than by the addition of a credit issue 
to purchasing power. That is to say, we 
must give the consumer purchasing power which 
does not appear in prices. 

Please remember that prices contain not only 
production costs, but capital costs, and these 
latter are the increasing factor in both costs 
and prices. If we take them out of prices 
and distribute them as purchasing power, then 

27 



I \ 



THE CONTROL AND 



prices bear the same relation to costs as does 
consumption to production. You will see 
that this is so if you remember that capital 
charges represent sums based on the credit 
value of tools, etc. 

But, of course, this results in speedy bank- 
ruptcy to the producer who is selling under 
cost, unless we go a good deal further. 

It must be borne in mind that, though we 
find that we require to eliminate these credit- 
capita' charges from prices, the credit-capital 
is a real if intangible thing, and can be drawn 
upon, because tools, processes, solar power, 
etc., represent a real capacity to deliver goods 
and services. Therefore there must be some- 
thing somewhere which stands in the position 
of trustee for the collective credit, and should 
administer it in the interests of the individuals. 
There is such an organ — it is the Treasury. 

But the Treasury does not in normal times 
deal with manufacturers, it deals with the 
banks, and the banks are so-called private 
institutions which administer this collective 
credit for their own ends, and those ends 
are by no means similar to the ends of the 

28 



i 



DISTRIBUTION OF PRODUCTION 

community of individuals from whom the 
credit takes its rise. 

If, therefore, we wish to solve the first half 
of the problem, that of the control, in the 
interest of the consumer, of the credit issued 
to manufacturers, we have to put control of 
the policy of the banks at the disposal of the 
consumer interest. 

If, at the same time, we wish to ensure that 
the goods, when they are produced, are dis- 
tributed amongst the individuals in whose 
interest, ex hypothesi, they were made, we 
have to get the credit purchasing power which 
attends the capacity to make and deliver them 
into the hands of those individuals. We can 
deal with this latter problem in two possible 
ways — either by a gift of Treasury " money " 
obtained by a creation of credit, or by reducing 
prices below cost to the individual consumer, 
and then making up this difference between 
price and cost by a Treasury issue to the 
producer. I hope you realise that the only 
basis for such a credit issue is the difference 
between what the productive organisation 
is called upon to deliver and what it could 

29 



THE CONTROL AND 



deliver if its capacity were stretched to the 
utmost. 

The latter of the two foregoing aterlnatives 
is, I think, by far the more practicable, because 
it not only delivers the purchasing power at 
the moment that it is wanted — at the moment 
of purchase — but it is also far better adapted 
to the psychology of the present time. It is 
the method which has been embodied in the 
suggestions which Mr A. R. Orage and I have 
been endeavouring to bring to the notice of 
the public in the Draft Scheme for the Mining 
Industry. 

This scheme has been fairly widely discussed, 
both here and in America, but there is one 
feature of it which will perhaps bear a little 
elaboration — the obvious traversing of all 
accepted Socialist policy in the provision not 
only for the continuance of dividends to present 
shareholders, but the wide extension of those 
dividends to still more shareholders. I will 
not take up your time with the philosophic 
basis of the proposal, although it has such a 
basis ; but would merely draw your attention 
once again to the quite undeniable fact that 

30 



I 



DISTRIBUTION OF PRODUCTION 

there is simply not room in econotnic industry 
— by which I mean industry financed from 
public credit — for more than a small and 
decreasing fraction of the available labour. 
The attempt to cram all this human energy 
into a function of society which has no need 
of it is neither more nor less than lunacy. But 
we have to recognise, as a matter of common 
sense, that to throw a large and inexperienced 
section of the population out of its usual 
pursuits suddenly, and without preparation, 
and with more spending power than it has the 
training to use, might have a number of un- 
pleasant consequences. I do not believe for 
one moment in all the nonsense talked about 
work and drink being the only alternatives of 
the British working-man — it is a gross calumny; 
but a smooth and rapid transition stage is 
desirable, and that is provided in the scheme 
by the increasing substitution of wages by 
dividends. When this process had proceeded 
far enough we should have defeated also one of 
the worst features of the present system, which 
is unable to distribute goods made and stored, 
without making more goods, whether these are 

31 



THE CONTROL AND 



required or not, merely for the purpose of 
distributing purchasing power. You will no 
doubt ask what are the prospects of such a 
scheme as we are considering. 

Well, in the first place, it has to be observed 
that the unco-ordinated parts of it are coming 
into being with tremendous rapidity and, to 
those who have eyes to see, with irresistible 
momentum. In this country it is quite obvious 
that not only cannot the public debt (all issues 
of securities, whether to so-called private com- 
panies, local authorities or Govermental bodies, 
are public debt fundamentally) be reduced, but 
the business of the country cannot be carried 
on for a month without a continuous increase 
in it. The immediate effect of an attempt to 
restrict the flow is a slump in trade and an 
avalanche of business crises, which is only just 
beginning, but which will, unless I am very 
much mistaken, or war provides an alternative, 
proceed to lengths quite suflQ.cient to establish 
the principle. 

The mechanism is being forged. The 
Brotherhood of Locomotive Engineers in 
America has, on the first of this month, opened 

32 




DISTRIBUTION OF PRODUCTION 

the doors of the first of a series of banks 
whose credit rests fundamentally on the rail- 
way services of the American continent, not 
on the cash in the vaults of the bank. The 
Confederation General de Travail is about to 
inaugurate a bank with a nominal capital of 
25,000,000 francs on the same lines. These are 
the beginnings of the shifting of control. 

The operations of these organisations will, 
in the first place, assist in raising prices — in 
fact, by enormously enhancing the economic 
power of Labour, will tend to raise them con- 
siderably. But as the toothache is the only 
agency which will drive the majority of people 
to a dentist, there will be posed thereby a 
plain issue — and to that issue I do not know 
any other reply than that I have endeavoured, 
so far as time has allowed, to put before you. 



33 



CHAPTER II 

THE CONTROL OP POLICY IN INDUSTRY 

Your Principal has been flattering enough to 
suggest that you might be interested to listen 
for a short time to-night to certain ideas on 
the subject of the industrial problems which 
have been made public, for the most part, 
through the columns of The New Age. Before 
proceeding to the concrete proposals, I should 
like, with your permission, to go over the 
philosophy of them very briefly. 

In any undertaking in which men engage, 
to paraphrase the ever-green Sir W. S. Gilbert, 
there are always at least two fundamental as- 
pects which demand recognition before success 
can possibly be expected to accrue to those 
engaged in it. These are that there must first 
be a clear, well-defined policy, which means 
that every person who has any right to be 
heard in the matter in hand shall agree as to 
the results which he is willing to further with 
his support. And there must be somewhere 

34 



DISTRIBUTION OF PRODUCTION 

resident in the venture some person or persons 
with expert knowledge as to the technical pro- 
cesses by which those results can be achieved 
with the materials (using the word in its 
broader sense) at the disposal of those as- 
sociated together, and this person must have 
the confidence of the remainder. 

I should like you to observe particularly 
that certain very important — in fact, quite 
fundamental — relationships proceed from these 
simple premises. The genesis of such an 
association is agreement that a certain result 
is desirable and a general belief that it can be 
attained — it is not at all necessary that all of 
those associated shall know how to attain the 
result, but it is vital that they shall be satisfied 
with it. We may imagine this association to 
be the community. Secondly, the person or 
persons who " know how," who collectively 
we may call the producers, who will be em- 
powered by the community to materialise the 
results of the agreed policy, stand fundament- 
ally and unalterably on a basis of Service — it 
is their business to deliver the goods to order, 
not to make terms about them, because it is 

36 



THE CONTROL AND 



the basis of the whole arrangement that the 
general interest is best served by this relation- 
ship. (This applies, of course, to their simple 
function of producers, not to their comprehen- 
sive, all-embracing r61e of individuals.) Sub- 
ject to this fundamental provision that they 
deliver the goods to order, it is no business of 
the controllers of policy, the community, how 
the producers deliver them — that is a matter 
for agreement amongst the producers. 

The goods having been delivered to order, 
it is the business of the community, to whose 
order they were made, to dispose of them — 
not the business of the producers, who would 
never have been able to function without the 
consent of society. 

Now in the present dissatisfaction with the 
productive system which is the outstanding 
feature of the present time there is a remark- 
able misdirection of attack — the battle front 
is aligned as between employer and employed, 
the so-called Capitalist and Labour, whereas 
the real cleavage is between '' producer- 
distributor" (both controlled by the financier) 
and consumer — employers and employed 

36 



DISTRIBUTION OF PRODUCTION 

forming the producer-distributor army, and 
the whole community, which includes the 
producers, forming the opposition. If any- 
one doubts this, a consideration of the 
facility with which Labour obtains increases 
of pay, just so long as these increases can be 
recovered from the public in the form of 
increased prices, will surely dispel the doubt. 
The position, therefore, is one of civil war of 
the gravest character — gravest because the 
" victory " of either side means the destruction 
of both . 

Before proceeding to the consideration of 
the means available to meet this situation, 
it is necessary to be clear on the matter of 
policy. 

There is no possible definition of a policy 
which is all-embracing in its acceptance other 
than the word " Freedom." People only 
unite in wanting what they want. We shall 
never get one inch farther along the road to 
a final settlement of world problems until we 
make up our minds for good and all whether 
a man is in the largest sense more benefited 
by learning, through trial and error, what is 

37 



THE CONTROL AND 



good for him, or, on the other hand, whether 
he should be ruled in the way he should go 
by Authority. 

Personally I am convinced that the former 
conclusion is inevitable. The dictatorship of 
the proletariat or any other comprehensive 
dictatorship is intolerable and impracticable. 
Please note that I am referring to man as an 
individual — not as a producer. The technique 
of production is a matter of Law, not of Emotion 
and Desire, and I believe that a much more 
exacting discipline will be expected of those 
of all ranks who are privileged to serve the 
community in any capacity, and that the 
penalty of failure to live up to that discipline 
will be the loss of that privilege, which will 
be a much greater loss when no economic 
question enters into it. 

It used to be a very common argument that 
the spur of economic necessity was ennobling 
to the character. Frankly, I don't believe it. 
If you will, and I am sure you will, look at 
the question from a detached point of view, 
I think you wiU agree that the man who is 
engaged in " making money " is neither so 

38 



^1 



DISTRIBUTION OF PRODUCTION 

pleasant or so broad-minded to deal with, nor 
80 fundamentally efficient, as the man who, 
while yet exerting his capacity for useful 
effort to the utmost, is by fortune lifted above 
the necessity of considering his own economic 
advantage. The struggle to overcome diffi- 
culties is most unquestionably ennobling, but 
we have, I think, reached a stage when our 
attention may with advantage be diverted 
from the somewhat sordid struggle for mere 
existence. 

We want, therefore, to put more and finally ' 
all people in this position, not to remove from 
it those who are already there, always assuming 
that the alternative exists ; and to do that 
we want so to organise the machinery of pro- 
duction that it serves the single end of forming 
the most perfect instrument possible with which 
to carry out the policy of the community ; and 
so to empower the community that individuals 
will submit themselves voluntarily to the 
discipline of the productive process, because 
in the first place they know that it is operated 
for production and so gains their primary ends 
with a minimum of exertion, and in the second 

39 



THE CONTROL AND 



place because of the interest and satisfaction 
of co-operative, co-ordinated ef!ort. You will 
understand that the physical facts of produc- 
tion are such that, operated in this way, only 
a small proportion of the world's population, 
working short hours, could find employment 
directly in the industrial process — a condition 
of affairs which is cumulative and reduces to 
an anachronism the complaint of the early 
Victorian Socialist against the idle rich, and 
to an absurdity the super-Industrialist cry for 
greater production at a cost of harder work. 
To anyone to whom this aspect of the case is 
unfamiliar, I would commend the works of 
Mr Thorstein Veblen on Capitalist Sabotage, 
or the more specialised conclusions of the late 
H. M. Gantt and his partner, Mr Walter 
Polakov. The present preoccupation of the 
financial system is to hide the enormous 
capacity for output which modern methods 
have placed at our disposal ; and it is fairly 
successful in its efforts, so far. 

So much for the philosophy of the subject. 
If you agree with it you wiU. see at once that 
the problem with which society has to grapple 

40 



I 



DISTRIBUTION OF PRODUCTION 

falls naturally and inevitably into certain lines. 
The 'primary object of the whole industrial 
system should be the delivery to individuals, 
associated together as the public, or society, 
of the material goods and services they indi- 
vidually require. This demand of individuals, 
be it emphasised, is the absolute origin of all 
activity. Since men co-operate to satisfy this 
demand, which is complex in its nature, it is 
necessary to also combine the demand, and 
this combined demand of society is the policy, 
so far as it is economic, of society as a whole. 
The first part of the problem, then, consists in 
j&nding a mechanism which will impose this 
policy on the co-operating producers with the 
maximum effectiveness, which always means 
with the minimum of friction. 

Now, if I have made my meaning clear, you 
will begin to see (willingly or otherwise !) that 
this has nothing to do with " workshop control 
by the workers " — in fact is in one sense the 
antithesis of it. It involves the assumption 
that the plant of civilisation belongs to the 
community, not to the operators, and the 
community can, or should, be able to appoint 

41 



THE CONTROL AND 



or dismiss anyone who in its discretion fails 
to use that plant to the best advantage. So 
far you might say this is pure State Socialism, 
but I think you will agree, if I make myself 
clear, that it is nothing like what is commonly 
so called. In this connection the following 
paragraph from The Threefold State, by Dr 
Rudolf Steiner, a book which is attracting 
attention on the Continent, may be of 
interest : — 

" Modern socialism is absolutely justified 
1 in demanding that the present-day methods, 
• under which production is carried on for in- 
I dividual profit, should be replaced by others, 
' under which production will be carried on for 
\ the sake of the common consumption. But it 
is just the person who most thoroughly recog- 
nises the justice of this demand who will find 
himself unable to concur in the conclusion 
which modern socialism deduces : That, there- 
fore, the means of production must be 
transferred from private to communal owner- 
ship. Rather he will be forced to a conclu- 
sion that is quite different, namely : That 
whatever is privately produced by means 

42 



I 



m BIS 



DISTRIBUTION OF PRODUCTION 

of individual energies and talents must find 
its way to the community tlirougli the right 
channels." 

The radical difierence — and I would com- 
mend it to your most serious consideration — 
is that State Socialism is based on the premise 
that, firstly, the control of policy is resident 
in administration, and, secondly, that it is 
possible to " socially " control administration, 
and, thirdly, that the State should be able to 
supply economic pressure to the individual ; 
whereas I suggest to you that the control of 
policy is resident in credit (fundamentally, 
in the belief in the beneficial outcome of any 
line or action) and its financial derivations, of 
which money is one, while administration is 
a technical and expert matter not susceptible 
of being socialised, and, lastly, that the only 
possible method by which the highest civilisa- 
tion can be reached is to make it impossible 
for either the State or any other body to apply 
economic pressure to any individual. 

Any attempt either to socialise administra- 
tion or to govern by economic coercion quite 
inevitably leads to centralised organisation and 

43 



THE CONTROL AND 



centralised credit, resulting in all the well- 
known phenomena of inefficiency inseparable 
from the attempted subordination of the 
human ego to the necessities of a non-human 
system. The difference is the recognition of 
the difference between beneficial ownership 
and administrative ownership. The managing 
director of the White Star Line was in bene- 
ficial ownership of the Titanic, he controlled 
the credit of it ; but his attempt to interfere 
in its administration destroyed the Titanic. 

We can, then, for the moment leave the 
question of administration where it stands, 
the more so if you will consider that, however 
centain enthusiasts may endeavour to persuade 
you to the contrary, it is a well-recognised fact 
that it is impossible, in this country at any rate, 
to promote a strike of any magnitude on any 
basis but that of distribution — i.e. wages or 
prices — which only shows the general good 
sense of the British public. 

It is not suggested that administration is 
faultless, but by deferring the consideration of 
it — for it is essentially a technical matter — we 
are free to concentrate on the primary requisite 

44 



DISTRIBUTION OF PRODUCTION 

— the transfer of the control of the policy of 
production into the hands of those for whom 
the whole productive process exists — the in- 
dividuals who collectively form the public. 

As has been stated, the control of policy is 
resident in credit — a word which is quite 
sufficient, I have no doubt, to excite your worst 
forebodings, but I assure you that in itself the 
matter is very simple. A credit instrument is 
something which will enable you to get what 
you want. If you are stranded without food 
on an island overrun with rabbits, a shot- 
cartridge is in all probability the most effective 
credit instrument with which to deal with the 
situation, but in more highly organised com- 
munities the instrument in most general use, 
and which typifiies the rest, is what we call 
money. It differs from a cartridge chiefly 
in disappearing less noisily. 

It is absolutely vital to realise that the es- 
sential part of money is the belief that through 
its agency you can satisfy your demands. 
Once this is agreed you will see that the 
control of the issue of something which em- 
bodies this belief is equivalent to the control 

45 



THE CONTROL AND 



of the policy of society. The belief, if well 
founded, is real credit, and its vehicle, financial 
credit, convertible into money. 

There exists in civilised society in all 
countries to-day an institution whose business 
it is to issue money. This institution is called 
a bank. The banking business is in many re- 
spects the exact opposite of the Social Keform 
business — it is immensely powerful, talks very 
little, acts quickly, knows what it wants, 
chooses its employees wisely in its own 
interests. 

When a bank allows a manufacturer an 
overdraft for the purpose of carrying out a 
contract or a production programme, it per- 
forms an absolutely vital function, without 
which production would stop. If you doubt 
this, consider for a moment the result of a rise 
in the bank rate of interest on loans and you 
will see that the power to choke off producers 
by taxing them at will is essentially similar to 
that exercised by governments on consumers 
by orthodox taxation, with the vital difference 
that in the first case a purely sectional interest 
is operating uncontrolled by society, whereas 

46 



i 



DISTRIBUTION OF PRODUCTION 

in the second case the power undoubtedly 
exists, though ineffective because misunder- 
stood, to control it in the general interest. 

Now the vital thing done by a bank in 
its financing aspect is to mobilise effective 
demand. 

The effective demand is that of the public, based 
on the money of the public, and the willingness of 
producers to respond to economic orders ; but the 
paramount policy which directs the mobilisation 
is anti-public, because it aims at depriving, with 
the greatest possible rapidity, the public of the 
means to make its demands effective ; through 
the agency of prices. 

I would particularly ask you to note that 
there is no suggestion that bankers, as human 
beings, are in the main actuated by any such 
anti-social policy — the system is such that they 
simply cannot help the result. 

In order, then, to acquire public control of 
economic policy, we have to control the whole 
mechanism of effective demand — the rate at 
which its vehicle, financial credit, is issued, 
the conditions on which it is issued, and take 
such measures as will ensure that the public, 

47 



THE CONTROL AND 



from whom it arises, are penalised by with- 
drawal of the vehicle to the minimum possible 
extent. It must be obvious that the real 
limit of the rate at which something repre- 
senting purchasing-power could be issued to the 
public is equal to the maximum rate at which 
goods can be produced, whereas the " taking 
back " through prices of this purchasing-power 
should be the equivalent of the fraction of this 
potential production which is delivered. 

Let us imagine that wages, salaries and 
dividends, added together, were issued via the 
productive industries at a rate representing 
the maximum possible production of ultimate 
products, and actual consumption was only 
one quarter of potential production. Then, 
clearly, the community would only have 
exercised one quarter of its potential demand. 
But the whole of the costs of production — 
the issues of purchasing-power through the 
agencies of wages, salaries and dividends — 
would have to be allocated to the actuxil pro- 
duction as at present, and if we charge the 
public with the whole cost of production their 
total effective demand is taken from them. 

48 



DISTRIBUTION OF PRODUCTION 

But if we apply to the ascertained cost of 
production a fractional multiplier equal to the 
ratio of actual consumption to potential pro- 
duction, then we take back in prices that 
portion of the total purchasing-power which 
represents the actual energy draft on the 
productive resources of the community, and 
the price to the actual consumer would be, 
in the case above mentioned, 75 per cent, less 
than commercial cost. 

If I have made myself clear you will see 
that credit-issue and price-making are the 
positive and negative aspects of the same 
thing, and we can only control the economic 
situation by controlling both of them — not 
one at a time, but both together, and in order 
to do this it is necessary to transfer the 
basis of the credit -system entirely away from 
currency, on which it now rests, to useful 
productive capacity. The issue of credit in- 
struments will then not result in an expansion 
of money for the same or a diminishing amount 
of goods, which is inflation, but in an expan- 
sion of goods for the same or a diminishing 
amount of money, which is deflation. 
D 49 



DISTRIBUTION OF PRODUCTION 

I may perhaps be permitted to end on a 
graver note. The present maladministration 
of credit results in increasingly embittered j 

struggles for markets. Unless it is remedied, , 

war is inevitable — and the next, great war 
will destrov this civilisation. 



I 



00 



CHAPTER III 

THE CONTROL OF PRODUCTION 

It has frequently and rightly been emphasised 
that the essence of any real progress towards 
a better condition of society resides in the 
acquisition of control of its functions by those 
who are affected by its structure ; and it is 
well if somewhat vaguely recognised by the 
worker of all classes that this control is at 
present not resident in, but is external to, 
society itself, and that in consequence men and 
women, instead of rising to an ever superior 
control of circumstance, remain the slaves of a 
system they did not make and have not so far 
been able to alter in its fundamentals. 

This system is assailed under the name of 
Capitalism ; but of the millions who are con- 
vinced that by the destruction of Capitalism 
the Millennium wiU be achieved, not very 
many have yet awakened to the fact that 
Capitalism died an unhallowed death seventy- 
five years ago, more or less, and that the 

61 



THE CONTROL AND 



driving force of the system which, more than 
any other single cause, has produced the 
tangle of misery and unrest in which the world 
now welters is Creditism. 

Credit is a real thing ; it is the correct 
estimate of capacity to achieve, and the 
function and immense importance for good or 
evil of this real credit will be impressed on 
mankind with cumulative insistence in the 
difficult times ahead. But for the moment 
it is desirable to consider a narrower use of 
the word ; one conveying, however, a sense 
with which it is more commonly associated — 
financial credit. 

Financial credit is simply an estimate of the 
capacity to pay money — any sort of money 
which is legal or customary tender ; it is not, 
for instance, an estimate of capital possessed ; 
and its use as a driving-force through the 
creation of loan-credit is directly consequent on 
this definition. The British banMng system 
has, since the Banking Act of 1844, based its 
operations on the ultimate liability to pay 
gold, but in actual fact the community, as 
a whole, has dethroned gold, and bases its 



DISTRIBUTION OF PRODUCTION 

acceptance of cheques and bills on its estimate 
of the bank credit of the individual or corpora- 
tion issuing the document, and for practical 
purposes not at all on the likelihood that the 
bank will meet the document with gold. This 
bank credit simply consists of certain figures 
in a ledger combined with the willingness of 
the bank to manipulate those figures and at 
call to convert them into legal tender. What, 
then, is likely to induce a bank to increase the 
credit by the creation of loans, etc., of an 
applicant for that favour ? The answer is 
contained in the definition : the capacity to 
pay money ; and the credit will be extended 
absolutely and solely as the officials concerned 
are satisfied that this condition will be met. 
It is quite immaterial whether the judgment 
is based on existing " securities " or contem- 
plated operations ; the basis of bank credit 
to-day is simply and solely the capacity 
within an agreed time-limit, which may be 
long or short, to pay money. 

Now apply the consideration of this to such 
a problem as control of the provision of decent 
housing for the miners at rents not exceeding 

18 



THE CONTROL AND 



10 per cent, of tlie miners' earnings. There are 
a number of idealists, who cannot be labelled 
otherwise than half-baked, who wiU say that 
it is a " sound business proposition " to house 
the miners properly at low rents. There are 
also a number of people by no means half- 
baked who are prepared to lose a little on 
housing to retain control of industry. That 
it is in the highest sense sound is unquestion- 
able ; but as to being a business proposition 
we suggest to those well-meaning people of the 
first class whose minds are above detail, that 
they go to the banks unsupported by security, 
and endeavour to borrow money for such a 
project. 

We see, then, that it is purely a question of 
the financial effect likely to accrue from an 
enterprise which will induce the banks to back 
it with credit, and the use-value or inherent 
desirability of doing certain work is a by- 
product. But the deduction to be made 
from this is of transcendent importance — it 
is that to control industry in the interest 
of use -values you must back use -values 
with credit. And that means the control 

54 



I 



DISTRIBUTION OF PRODUCTION 

of credit. And in order to control credit 
the base on which it rests must be altered 
to meet the changed aspirations of society. 
The economic power of Labour is a potential 
power. By withholding it, Labour (using the 
term in its widest sense) can break down 
civilisation ; but it cannot build it up again 
by any agency that the mind of man has yet 
conceived which does not involve the use of 
credit in some form or other. The community 
creates all the credit there is ; there is nothing 
whatever to prevent the community entering 
into its own and dwelling therein except it 
shall be by sheer demonstrated inability to 
seize the opportunity which at this very 
moment lies open to it ; an opportunity which 
if seized and used aright would within ten 
years reduce class-war to an absurdity and 
politics to the status of a disease. 



55 



CHAPTER IV 

A MECHANICAL VIEW OF ECONOMICS 

Elsewhere an attempt has been made to 
show the dangerously false premises on which 
the New Unionist party bases all its hopes of 
Reconstruction. The keynote of the symphony 
we are to play under the conduct of Mr Lloyd 
George and the industrial federations behind 
him is production, production, yet more pro- 
duction ; and by this simple remedy we are 
to change from a nation with a 03 population 
and many grievances into a band of busy B's 
(or is it Al's ?) healthy, wealthy, happy and 
wise. 

It is a simple little remedy — one wonders 
why we never thought of it before. You 
seize any unconsidered trifle of matter which 
may be lying about, preferably on your 
neighbour's territory, and you make it into 
something else quite unspecified. You assert 
by a process of arithmetical legerdemain 
known as cost accounting that the value of 

56 



DISTRIBUTION OF PRODUCTION 

tlie original matter wliicli we may call " a " 
is now a + (b+c) + (d+e), " b " being labour, 
" c " overhead charges, " d " selling charges 
and " e " profit, and that the " wealth " of 
the country is increased by this operation in 
respect of a sum equal to (b +c +d +e). With 
the aid of your banking system you now create 
credits which show that "a" is a+etc — 
(x+y) (where " x " is loss in trading, etc., and 
" y " is depreciation) and there you are — Al. 

The chief objection to this otherwise fascin- 
ating idea is that despite a large body of most 
respectable and even highly paid accountants 
and bankers who will produce quantities of 
figures to prove that " a " has now become 
(a+b, etc.) and that the wealth of the country 
has been increased, etc., etc., the facts do not, 
unfortunately, confirm their statements. 

The power used in doing work on " a " has 
been dissipated in heat and otherwise ; the 
tools have been worn, the workmen have con- 
sumed food and clothes and have occupied 
houses, and what you have actually got is " a " 
minus any 'portion of ^' a^^ lost in conversion ; 
b, c, d, c, etc., are the price paid by the com- 

57 



THE CONTROL AND 



munity for the increased adaptability of "a " 
to the needs of the community, which price 
must in the last event be paid for in energy. 
The question of the gain in adaptability de- 
pends on what you produce ; but payment is 
inevitable. 

Under the existing conditions probably no 
body of men has done more to crystallise the 
data on which we carry on the business of the 
world than has the accounting profession ; but 
the utter confusion of thought which has un- 
doubtedly arisen from the calm assumption 
of the book-keeper and the accountant that he 
and he alone was in a position to assign positive 
or negative values to the quantities repre- 
sented by his figures is one of the outstanding 
curiosities of the industrial system ; and the 
attempt to mould the activities of a great 
empire on such a basis is surely the final 
condemnation of an out- worn method. 

While the effect of the concrete sum dis- 
tributed as profit is overrated in the attacks 
made on the capitalistic system, and is far and 
increasingly less important than the overhead 
charges added to the value of the product in 

58 



I 



DISTRIBUTION OF PRODUCTION 

computing its factoiy cost, it is tlie dominant 
factor in the political aspect of the situation, 
because the equation of production is stated 
by the capitalist in a form which requires it 
to be solved in terms of selling price, while 
" e," the profit, is always a plus quantity. 

Now the prime necessity of the situation, 
which is world-wide at this time, is to realise 
that in economics we are dealing with facts 
and not figures ; and mechanical facts at that . 
The conversion of a bar of iron into a nut and 
bolt and its change in price from 2d. or 3d. to, 
say, Is. means absolutely nothing at all beyond 
the fact that we have transformed a certain 
amount of potential energy into work in the 
process of changing the bar of iron into a nut 
and bolt, and that an arbitrary and totUay 
empirical measure of this potential energy in 
various forms is contained in the figures of 
cost. The factor which gives real character 
to the operation is the " inducement to 
produce." 

If the object of this use of material and 
energy is simply finance, we shall get a financial 
result of some sort — but two real things result 

59 



THE CONTROL AND 



in any case. First we have definitely decreased 
the energy potentially available for all other 
purposes, and, secondly, we have obtained 
simply a nut and bolt in return for a bar of 
iron and a definite amount of energy dissipated. 

If by wealth is meant the original meaning 
attached to the word — " well-being "—the 
value in well-being to be attached to our bolt 
and nut depends entirely on its use for the 
promotion of well-being (unless we admire 
bolts and nuts as ornaments), and bears no 
relation whatever to the empirical process of 
giving values to a, b and c, etc. 

Let us particularise : The immediate neces- 
sity as to which all political parties are agreed 
is improved housing. The financier says ; 
" Yes, you shall have money for housing as the 
result of building gunboats for Chile," thereby 
implying that there is a chain of causation 
between gunboats for Chile and houses for 
Camberwell. Not only is there no such real 
chain of causation, but the building of gun- 
boats for Chile, or elsewhere, decreases the 
energy available to build those houses, and 
when the total available energy is utilised, as 

60 



DISTRIBUTION OF PRODUCTION 

has been approximately the case during the 
war, and may easily be so again, not all the 
gunboats ever sold, no matter what the ac- 
counting figures attached to the transaction 
may indicate in added wealth to this country, 
will produce one house at Camberwell, or 
anywhere else. What is, of course, common 
to the two is the " inducement to produce," 
but that may or may not be a sound induce- 
ment. 

• The matter is really very serious. The 
economic effect of charging all the waste in 
industry to the consumer so curtails his 
purchasing power that an increasing percent- 
age of the product of industry must be ex- 
ported. The effect of this on the worker is 
that he has to do many times the amount of 
work which should be necessary to keep him 
in the highest standard of living, as a result 
of an artificial inducement to produce things 
he does not want, which he cannot buy, and 
which are of no use to the attainment of his 
internal standard of well-being. "While the 
mechanism of the process is possibly too 
technical for his general comprehension, he 
61 



DISTRIBUTION OF PRODUCTION 

has grasped the drift of the situation and shows 
every sign of a determination to make things 
interesting. On the other hand, we see a 
good sound reason for the capitalist's hatred 
for internationalism ; failing interplanetary 
commerce, he will have nowhere to export to, 
and will be faced with the horrible prospect 
of dividing up the world's production amongst 
the individuals who live here. In which case 
a larger number of people than at present will 
agree that it is possible to overproduce gun- 
boats. Given this situation, what wiU be the 
result of a " strong " Coalition Government ? 



63 




CHAPTEE V 

PRODUCTION AND PRICES 

It is admitted by almost everyone not utterly 
blind to the trend of public events tbat tbere is 
something seriously wrong in the world to-day. 
Hardly yet have the hospitals discharged the 
casualties of the first World War, yet the 
shadow of an even greater catastrophe is plain 
to those with eyes to see. Instead of the world 
for heroes to live in, one strike follows another 
to an inconclusive settlement ; an apathetic 
public regards the conflict between " Capital " 
and " Labour " with a lack-lustre eye, repeat- 
ing the while the cliches of its particular brand 
of millionaire- owned newspaper. 

Amongst the experts, various prescriptions 
for the disease of Society are propounded. 
These are : 

1. The Super-productionists, the "Capi- 
talist " party, M^ho refuse to admit any fault 
in the social system. The keynote of their 
remedy is harder work and more of it. 

2. What may be called the ecclesiastical 
party ; the keynote of their policy is " a change 

63 



THE CONTROL AND 



of heart." Their attention is concentrated in 
hierarchical problems, administration, etc. The 
legal, military, bureaucratic mind is essentially 
of this type, and the Whitley Council, the 
Sankey Report, and the various committee 
schemes of the Fabian Society in this country, 
the Plumb scheme in America, etc., are ex- 
amples of it. AH these schemes are deductive 
in character ; they start with a theory of a 
different sort of society to the one we know, 
and assume that the problem is to change the 
world into that form. In consequence, all the 
solutions demand centralisation of administra- 
tion ; they involve a machinery by which 
individuals can be forced to do something — 
work, fight, etc. ; the machine must be stronger 
than the man. 

Practically all socialist schemes, as well as 
Trust, Capitalist, Militarist, etc., schemes, are 
of this character— e.^. the League of Nations, 
which is essentially ecclesiastical in origin, is 
probably the final instance of this. 

It may be observed, however, that in the 
world in which things are actually done, not 
talked about, where bridges are built, engines 
are made, armies fight, we do not work that 

64 



i 



DISTRIBUTION OF PRODUCTION 

way. We do not sit down in London and say 
the Forth Bridge ought to be 500 yards long 
and 50 ft. high, and then make such a bridge 
and narrow down the Firth of Forth by about 
75 per cent, and cut off the masts of every 
steamer 45 ft. above sea-level in order to make 
them pass under it. We measure the Firth, 
observe the ships, and make our structure fit 
our facts. Successful generals do not say, 
" The proper place to fight the battle is at X, 
I am not interested in what the other fellow is 
doing, I shall move all my troops there." 

The attempt to deal with one of the in- 
dustrial and social difficulties existing at this 
time, which is embodied in these remarks, 
starts from this position therefore. 

It does not attempt to suggest what people 
ought to want, but rather what they do want, 
and is arrived at not so much from any theory 
of political economy as from a fairly close 
acquaintance with what is actually happening 
in those spheres where production takes place 
and prices are fixed. 

If we look at the problem of production from 
this point of view, the first thing we ask 
ourselves is, Why do we produce now ? The 
B 66 



THE CONTROL AND 



answer to this is vital — it is to make money. 
Why do we want to make money ? The 
answer is twofold. First, to get goods and 
services afterwards, to give expression, often 
perverted, to the creative instinct through 
power. Please note that these two are quite 
separate — whether a man has any recognisable 
creative instinct or not, he absolutely requires 
goods and services of some sort. We then 
have our problem stated ; we have to inquire 
whether our present mechanism satisfies it, 
and if not, why not, and how can it be altered 
so that it does satisfy it. 

Emphasising the fact that it is only half the 
problem, the only half I propose to deal with 
to-night, let us inquire to what extent we suc- 
ceed in our primary object — that of obtaining 
goods and services when we produce for money 
under the existing economic system. 

Production only takes place at present when 
at least two conditions are met, when the 
article produced meets with an effective de- 
mand — that is to say, when people with the 
means to pay are willing to buy, and when 
the price at which they are willing to buy is 
one at which the producers are willing to sell. 

66 



DISTRIBUTION OF PRODUCTION 

Now under the private capitalistic system 
the price at which the producer is willing to 
sell is the sum of all the expenses to which he 
has been put plus all the remuneration he can 
get called profit. The essential 'point to notice, \ 
however, is not the profit, hut that he cannot and 
mil not produce unless his expenses on the 
average are more than covered. These expenses 
may be of various descriptions, but they can 
all be resolved ultimately into labour charges 
of some sort (a fact which incidentally is 
responsible for the fallacy that labour, by 
which is meant the labour of the present 
population of the world, produces all wealth). 
Consider what this means. All past labour, 
represented by money charges, goes into cost 
and so into price. But a great part of the 
product of this labour — that part which re- 
presents consumption and depreciation — has 
become useless, and disappeared. Its money 
equivalent has also disappeared from the hand 
of the general public — a fact which is easily 
verifiable by comparing the wages paid in 
Industry with the sums deposited in the 
Savings Banks and elsewhere — but it still 
remains in price. So that if everyone had 

m 



THE CONTROL AND 



equal remuneration and equal purchasing 
power, and there were no other elements^ the 
position would be one of absolute stagnation 
— it would be impossible to buy at any price 
at which it is possible to produce, and there 
would be no production. I may say that in 
spite of enormously modifying circumstances I 
believe that to be very much the case at present. 

But there is a profound modifying factor, 
the factor of credit. Basing their operations 
fundamentally on faith — that faith which in 
sober truth moves mountains — the banks 
manufacture purchasing power by allowing 
overdrafts, and by other devices, to the 
entrepreneur class : in common phrase, the 
Capitalist. Now consider the position of this 
person. He has large purchasing power, but 
his personal consuming power is like that of 
any other human being : he requires food, 
clothes, lodging, etc. 

If, as is increasingly the case, the personal 
Capitalist is replaced by a Trust, there is a 
somewhat larger personal consuming power, 
represented by the stockholders, but it is still 
incomparably below the purchasirg power 
represented by credit. "What happens ? After 

68 



DISTRIBUTION OF PRODUCTION 

exhausting the possibilities of luxuries, the or- 
ganisation itself exercises the purchasing power 
and buys the goods and services which it itself 
consumes — machinery, raw material, etc. In 
consequence, the production which is stimu- 
lated — the production which we are asked 
to increase — is that which is required by 
the industrial machine, intermediate products 
or semi-manufactures, not that required by 
humanity. It is perfectly true that money is 
distributed in this process, but the ratio of this 
money to the price- value of human necessities 
— ultimate products — is constantly decreasing 
for the reasons shown, and the cost of living 
is therefore constantly rising. 

Before turning to the examination of the 
remedy built upon this diagnosis it is neces- 
sary to emphasise a feature of our economic 
system which is vital to the condition in which 
we find ourselves — i.e. that the wages, etc., 
system distributes goods and services through 
the same agency by which it produces goods 
and services — the productive system. In other 
words, it is quite immaterial how many com- 
modities there are in the world, the general 
public cannot touch them without doing more 

89 



THE CONTROL AND 



work and producing more commodities. It is 
my own opinion, not lightly arrived at, that 
that is the condition of affairs in the world 
to-day — that there is little if any real shortage, 
but that production is hampered by prices, and 
the capitalists cannot drop prices without 
losing control. However that may be, this 
feature, in conjunction with those previously 
examined, has many far-reaching consequences 
— amongst others the feverish struggle for 
markets, which in turn has an overwhelmingly 
important bearing on Foreign Policy. To sum 
the whole matter up, the existing economic 
arrangements — 

1. Make credit the most important factor 

in effective demand ; 

2. Base credit on the pursuit of a financial 

objective, and centralise it ; 

3. This involves constantly expanding pro- 

duction ; 

4. This must find an effective demand, 

which means export and more credit ; 
6. Makes price a linear function of cost, 
and so limits distribution, largely to 
those with large credits ; 
70 



DISTRIBUTION OF PRODUCTION 

6. Therefore directs production into channels 
desired by those with the largest 
credits. 

A careful consideration of these factors will 
lead to the conclusion that loan-credit is the 
form of effective demand most suitable for 
stimulating semi-manufactures, plant, inter- 
mediate products, etc., and that " cash "- 
credit is required for ultimate products for 
real personal consumption. The control of 
production, therefore, is a problem of the 
control of loan-credit, while the distribution 
of ultimate products is a problem of the 
adjustment of prices to cash-credits. It is 
only with this latter that we are at present 
concerned. 

We have already seen that the cash-credit 
provided by the whole of the money distributed 
by the industrial system, so far as it concerns 
the wage-earner, is only sufficient to provide 
a small surplus over the cost of the present 
standard of living, and that only by conditions 
of employment which the workers repudiate, 
and rightly repudiate. We cannot create a 
greater surplus by increasing wages, because 

71 



THE CONTROL AND 



the increase is reflected in a compound rise in 
prices. Keeping, for the moment, wages con- 
stant, we have to inquire what prices ought to 
be to ensure proper distribution. 

Now the core of this 'problem is the fact that 
money which is distributed in respect of articles 
which do not come into the buying range of the 
persons to whom tlie money is distributed is not 
real money — it is simply inflation of currency 
so far as those persons are concerned. The 
public does not buy machinery, industrial 
buildings, etc., for personal consumption at aU. 
So that, as we have to distribute wages in 
respect of aU these things, and we want to 
make these wages real money, we have to 
establish a relation between total production, 
represented by total wages, salaries, etc., and 
total ultimate consumption, so that whatever 
money a man receives, it is real purchasing 
power. This relation is the ratio which total 
production of all descriptions bears to total 
consumption and depreciation. 

The total money distributed represents total 
production. If prices are arranged as at pre- 
sent, so that this total will only buy a portion 

72 



DISTRIBUTION OF PRODUCTION 

of tlie supply of ultimate products, then all 
intermediate products must be paid for in 
some other way. They are ; they are paid for 
by internal and external (export) loan-credit. 

If prices are arranged so that they bear the 
same relation to cost that consumption does 
to '^preciation, then every man's money wiU 
buy him his average share of the total con- 
sumption, leaving him with a balance which 
represents his credit in respect of his share in- 
the production of intermediate products (semi- 
manufactures) — a share to which he is entitled, ^ 
but which is now almost entirely controlled by \ 
the financier in partnership with the industrial 
price-fixer. 

It is a little difficult to state with any 
accuracy what proportion of cost prices ought 
to be because of the distorting effect of waste, 
sabotage and aimless luxury. 

I am making some rather tedious investiga- 
tions into this, and I can only say that I am 
convinced that even now prices are five times 
too high, and that with proper direction of 
production this figure would be greatly ex- 
ceeded. 

73 



CHAPTER VI 

WHAT IS CAPITALISM ? 

When two opposing forces of sufficient 
magnitude push transversely at either end of 
a plank — or a problem — it revolves : there is 
Revolution. When the forces are exhausted 
the revolution subsides, and the plank or 
problem remains in much the same position in 
space which it occupied before the forces acted 
on it. It is possible to conceive its molecules 
as being somewhat worn and giddy as a result 
of their rapid reorientation, but their environ- 
ment is otherwise unchanged. If, however, 
the forces act through the centre of resist- 
ance, actual motion results ; the object is 
shifted bodily by the greater force, without 
revolution. 

In the first portion of this metaphor is to be 
found the explanation of the devastating in- 
conclusiveness which dogs the steps of the 
constant and increasingly embittered contro- 
versy between the forces of what is called 

74 



I 



DISTRIBUTION OF PRODUCTION 

Capitalism and its antagonist Labour, and for 
a recent instance of the phenomenon it is not 
necessary to go further than the Coal Com- 
mission. During the earlier part of the inquiry- 
it was made abundantly plain that an in- 
tolerable state of affairs existed in the coal 
industry. Mr Smillie's attack was so well 
delivered, the evidence marshalled was so 
damning, that had the case been closed at that 
point the position of the miners, and with them 
Labour generally, would have been incon- 
ceivably strengthened. But, unfortunately in 
the general interest, the case was not closed 
there. The ground was immediately shifted 
to a discussion of the merits of private, as 
opposed to nationalised, administration. 

Now I suppose it is a thankless task to say 
it, but the second question has about the same 
relation to the subject matter of the attack 
as has the strategy of a general to the pay 
of his troops. In consequence the issue now 
before the public is not whether the economic 
contract between the miners as members of 
the community, on the one hand, and the 
mining industry controlled by the colliery 

76 



THE CONTROL AND 



proprietors as producers for the community, 
on the other, is a bad and inequitable contract, 
but whether, under what is in essence the 
same contract, the miners' scheme of organisa- 
tion is a better scheme than the employers'. 
Personally I very much doubt it. 

This is a matter which affects the general 
public quite as much as the miners themselves. 
It is fairly obvious that, recognising that 
Labour is determined to attack Capitalism, 
and having themselves no delusions about the 
real issue, the admirable brains behind the 
Capitalist organisation have decided, while 
providing just so much opposition as is 
necessary to register a protest, to allow an 
experiment on lines already discredited to 
be made at the expense of the consumer, 
in order that its stultification, which can be 
insured, wiU strengthen Finance elsewhere. 
Brer Rabbit, being in some danger, is be- 
traying a special and exaggerated fear of 
the briar bush. 

This is, of course, all very adroit : it shifts 
the opposing forces to the opposite ends of the 
plank. The question for the molecules — the 

76 



DISTRIBUTION OF PRODUCTION 

general public — however, is whetlier they care 
about the resultant revolution. If not, then 
their concern is to bring the opposing forces 
into line — to see that Labour is attacking what 
Finance is reaUy concerned to defend. 

The general public is more likely to do this 
if it can be brought to realise that it is really 
as members of the community, not as artisans, 
that the attack is operating. 

The whole tendency of Trade Unionist, just 
as much as Capitalistic, propaganda is to 
obscure this fact, and by so doing split the 
offensive, but the most superficial considera- 
tion of the root idea of the existing economic 
system will establish it. 

" Capitalism " is not a system of administra- 
tion at all ; it is a system of fixing prices in 
relation to costs. This is not to say, of course, 
that the personnel and methods of administra- 
tion would not be profoundly affected and 
improved by a valid and radical modification of 
the "capitalistic" — i. e. financial — system, but 
such changes would be effects and not causes. 

The root problem of civilisation — not the 
only problem, but that which has to be disposed 

77 



THE CONTROL AND 






of before any other — is the problem of the 
provision of bed, board and clothes, and this 
affects the ordinary man in terms of effort. 
If he has to work hard and long hours to 
obtain a precarious existence, then for him 
civilisation fails. As the miner demonstrably 
had to work longer for a lower standard of life, 
measured in terms of purchasing power, than 
existed in the fourteenth century in England, 
then for him progress was not operative. But 
the reason he has to do these things is not at 
all that the coal mines are badly worked, 
although it is quite possible that they might 
be better worked, just as it is possible and 
excusable that the miners' own efficiency is not 
so high as it might be under better conditions. 
The plain, simple English of the reason is that 
his wages will not buy him the things he wants. 
His own common-sense has consequently con- 
sistently been applied to the problem of raising 
his wages, but has for the most part stopped 
for want of technical knowledge at the recogni- 
tion of the effect of this on prices. 

In the December 1918 number of The English 
Review it was pointed out in a short article 

78 



I 



DISTRIBUTION OF PRODUCTION 

entitled " Tlie Delusion of Super-Production " 
that the sum of the wages, salaries and divi- 
dends distributed in respect of the world's 
production was diminishingly able to buy that 
production at the prices which the capitalist is 
hy his system forced to charge. '* Profiteering," 
in the sense of charging exorbitant sums in 
excess of cost, is a mere excrescence on the 
system. If the producer could be imagined 
as making no profit at all, the difficulty would 
still exist, quite possibly in an exaggerated 
form. That is why the policy of more and 
yet more production at prices fixed on a basis 
of cost and profit is a mere aggravation of the 
prevailing difficulty. Because the available 
purchasing power would absorb a decreasing 
proportion of this production it must be either 
exported or wasted, and both of these lead 
straight to war, the supreme waster. 

Now habits of thought are so powerful in 
their influence that at first sight a statement 
that the correct price of an article may be a 
low percentage of its cost is apt to induce both 
disbelief and ridicule. But if the matter be 
attacked from the other end, if it be realised 

79 



THE CONTROL AND 



that an article cannot be sold, nor can its 
exchange through export be sold, unless its 
average price is considerably less than cost ; 
that if it cannot be sold the efiort expended 
in making it is wasted ; that if it is exported 
competitively every economic force is driving 
the community irresistibly towards war ; it 
may then be agreed that it is worth while to 
consider whether the accepted principles of 
price making are so sacred that a world must 
be brought to ashes rather than that they should 
be analysed and revised. 

The analysis has been made ; and although 
the methods by which the results are arrived 
at are too technical for description in an 
article of this character, it may be said that 
the purchasing power of effort at this time 
should be certainly not less than five times its 
present return, and most probably very much 
more. In other words, with wages at their 
present level the cost of living ought to be 
one-fifth or less of what it is. The essential 
facts on which this statement is based are 
that production is overwhelmingly dependent 
on tool power and process ; that tool power 

80 



DISTRIBUTION OF PRODUCTION 

and process are a cultural inheritance belonging 
not to individuals but to tbe community, being 
largely the result of work done by persons now 
dead ; and that in consequence the equitable 
return for effort includes a dividend on this 
inheritance which is immeasurably larger than 
the direct payment. Just as the time-rate of 
production has diverged from that possible 
to a community without tools, processes or 
education, so to a corresponding degree has 
the present economic system become inequit- 
able and unsound. 

It is a matter of simple fact that men do not 
in the mass act together for ethical conceptions. 
That is why a strike can always be settled for 
the time on a money basis ; and the only 
demand which wiU not be so disposed of is one 
which promises more purchasing power by its 
success than its opponents can in the nature 
of things dispose of, because such a demand 
will utterly divide them. But any demand 
which savours of the perpetuation and ex- 
tension of a bureaucracy which is already 
highly unpopular will alienate not only the 
general public but the organised worker. 

7 81 



CHAPTEE VII 

THE QUESTION OF EXPORTS 

I HAVE received two letters which seem to 
indicate some confusion of thought as to the 
bearing of a modified credit system on export 
trade. Both these letters quote statistics of 
wheat production and consumption with a 
view to throwing some doubt on our capacity 
to grow our own food. Now, ultimately, 
statistics are indispensable to sound practical 
politics, but to the writers of these letters, as 
well as to others who may be tempted to attack 
the problem on the basis of official statistics, 
it may be emphasised that it is nearly irrelevant 
to the primary issues whether this country can 
feed its population off its own acreage or not. 
It is quite arguable that it can ; and it is also 
arguable that it would be bad business for it 
to try. These issues are : 
1. Are there inducements operating towards 
the best use of the land we have ? 
82 




DISTRIBUTION OF PRODUCTION 

2. If we export services (i.e. the energy 
element of production) do we get the 
best real price for them ? 

In regard to 1, and leaving out of the argu- 
ment, for the moment, the indisputable fact 
that the acreage under wheat is steadily de- 
creasing decade by decade, consider the posi- 
tion of the farmer. He, like everyone else 
at present, is in business to make money, not 
to deliver goods. It is quite true that he 
makes money by selling things, but he can 
easily make more money by selling less goods 
at a higher price than vice versa. 

Now wheat is one of a fairly small group of 
commodities over the price of which the in- 
dividual producer has practically no control 
whatever. It is a graded homogeneous pro- 
duct bought in bulk by experts who have 
a strictly finite demand for it, and the price 
paid is under existing conditions purely fixed 
by financial supply and demand, whether un- 
fettered or artificially stimulated byrings, and is 
not directly based on cost. Normally, a given 
amount of foreign wheat is contracted for in 
this country — bought on " futures " by grain 

83 



THE CONTROL AND 



brokers whose price fixes a datum line for 
home-grown wheat. So long as wheat is in 
short supply as compared with the demand, 
the price rises, and everyone engaged in the 
grain trade, either as producer or dealer, may 
benefit, although no doubt most of the benefit 
goes to the dealer. The relation of the farmer 
to this situation must surely be plain. The one 
situation he must avoid at all costs is that 
produced by throwing grain on the market in 
any quantity which wiU bring down prices — 
that is to say, slacken the demand or com- 
petition to buy. His criterion of a satisfactory 
output, therefore, bears no relation to what 
amount of wheat the public requires, or what 
amount the land wiU produce, but rests funda- 
mentally on, firstly, the operations of the 
grain brokers and, secondly, an estimate of 
what margin of profit can be extracted from 
the market by keeping it short of wheat with- 
out causing a secondary movement of grain 
from other markets. As transportation 
facilities improve, the proposition becomes 
less and less attractive to the farmer, who is 
driven more and more to the production of 

84 



I 



DISTRIBUTION OF PRODUCTION 

perishable goods, sucli as eggs, butter and milk, 
wbose nature enables him to control the local 
market, or to the raising of stock on which the 
transportation charges and risks are heavy. 
The first prime question can therefore be 
answered quite confidently in the negative. 
In regard to the second point, let us assume 
that the magnitude, at any rate of our imports 
of foodstuffs, is a reasonable subject of dis- 
cussion and policy. It is evident that there 
is a point at which it is debatable whether we 
should grow the last few million quarters of 
wheat required on land which may not be of 
the most suitable description, or whether it 
is sound business management to obtain this 
wheat by the exchange for it of manufactured 
goods — that is to say, by an export of economic 
energy. It does not take much consideration 
to see that the answer to this is purely quan- 
titative : how much wheat are we to get for a 
given energy export ? 

Consider the present situation. It is true 
enough, as our super-industrialists and ortho- 
dox economists are always telling us, that 
imports are paid for by exports, but on the 

85 



THE CONTROL AND 



whole, they are content to leave it at that. 
They do not explain, for instance, how a 
population which most certainly cannot, and 
does not, buy its own total production for 
cash (if it could, there would be no necessity 
either for home or export credits, and no 
*' unemployment " problem), can become able 
to buy the imports which are exchanged for the 
unpurchasable surplus. They do not, again, 
explain how a textile worker, paid wages 
for converting a bale of raw cotton worth, 
say, £20 into goods worth, say, £60 can bene- 
fit if in return for these manufactured goods 
two more bales of raw cotton at £40 are received 
— a condition common to trade booms. Nor 
do they generally publish the fact that English 
machinery is often sold to export agents 
abroad at far lower prices than those at which 
the same machinery can be obtained at home, 
or that it is possible to buy, in the bazaars of 
Bombay, a shirt made in Lancashire for a 
quarter the price at which the same shirt can 
be bought retail in Manchester. 

The simple facts are that, under existing 
arrangements, our principal preoccupation is 



DISTRIBUTION OF PRODUCTION 

the provision of employment — the makiug of 
work. On this simple canon hangs the law 
and the profits. When, therefore, a locomotive 
is required for the Argentine, and assuming 
for the moment that it is in any sense sold in 
the open market, there is a competition, open 
to the industrial nations of the world, to sell 
locomotives and to buy wheat, with the usual 
and logical result that wheat appreciates in 
price in terms of locomotives, the industrial 
exporting country continually gives more, 
and the exporting agricultural country con- 
tinually less, economic energy in every bargain. 
That is the proposition in a nutshell. In 
order to make a bargain which is just — i.e. 
judicious — the industrial nation must be re- 
stored to the position of a free, not a forced, 
seller, just as to restore social equilibrium 
inside the nation the individual must be put 
in the position of a free, not a forced, worker. 
The arrangements which would fulfil these 
desiderata are already sufficiently familiar in 
principle. 



87 



CHAPTER VIII 

UNEMPLOYMENT AND WASTE 

While it is necessary to bear in mind that the 
object of industry should not be employment, 
but rather the delivery of goods with a mini- 
mum expenditure of energy on their production, 
it is yet true that at the moment unemployment 
does form a practical problem demanding 
alleviating treatment. The word is generally 
used to indicate labour unemployment, but it 
is practically impossible to have any consider- 
able volume of labour unemployment without 
a capital unemployment representing many 
times the production value of the idle labour. 

To the extent that private capitalism in the 
old sense can be said to exist, this is just as 
great an evil to the capitalist as to the manual 
worker, although its incidence may not be so 
personal or so immediately tragic. It penalises 
his initiative, depletes his reserves, and finally 
bankrupts him ; and the whole of the process 
is eventually an injury distributed over the 

88 



DISTRIBUTION OF PRODUCTION 

community in general, resulting in a deteriora- 
tion of moral, as well as in the more material 
evil of a rise in prices. 

It is particularly important to notice tlie 
wastefulness of the system. A demand backed 
by money arises in the community for a 
particular class of goods ; an enterprising 
manufacturer puts down a plant " at his own 
expense," as the misleading phrase goes (it 
is impossible for anyone to put down modern 
plant at the expense of other than the general 
consumer), and supplies the goods. This man 
is a public benefactor ; he gives the public 
what it wants, and he gives it much quicker 
than it would be possible to get it by any other 
system, because one man can make a decision 
quicker than a dozen men, to say nothing of 
a Government Department. A trade slump 
comes ; unemployment grows like a snowball, 
since every man thrown out of work is one man 
less receiving money, and therefore one man 
less in the market to buy goods ; our manu- 
facturer, though stiU willing and able to make 
his product, cannot sell it, and if this state of 
affairs continues for any length of time he is 

89 



THE CONTROL AND 



ruined. His business organisation is probably 
excellent, but it is broken up and bis plant 
dispersed, and when the trade revival comes a 
new plant and a new organisation has again 
to be constructed at the expense of the 
consumer. 

Both the employer and the employed are so 
familiar with this cycle that both take steps 
which they imagine will protect them against 
its eSects, but which in fact only make con- 
fusion worse confounded. During times of 
brisk trade the employer charges the highest 
price he can obtain, or, in other words, delivers 
the minimum of goods for the maximum of 
money, and embodies his large profits in in- 
visible reserves, with the result that the con- 
sumer is left without any effective demand 
(demand backed by money) as soon as his 
wages cease. The worker, sensing this, does 
in his sphere precisely the same thing — he uses 
his trade combinations to obtain the maxi- 
mum amount of money for the minimum 
amount of production, not realising that this 
money simply goes into the cost of the pro- 
duct, which has to be paid by the community 

90 



DISTRIBUTION OF PRODUCTION 

of which he forms so large a part. Since, 
superficially, it seems vital to the interest of 
both of them to keep the process moving as 
long as possible, the manufacturer is driven 
to sell, by advertisement or otherwise, useless 
or inferior and quickly worn-out articles where 
he cannot make a handsome profit on durable 
and well-finished production, the life and use- 
fulness of which operate in the tmest sense 
towards labour-saving. 

Consider, then, the position at the present 
time. It is certain that both employers and 
employed are willing and able to work on 
terms ; it is demonstrable without difiiculty 
that the productive capacity of industry, with 
its labour, plant and organisation, greatly 
exceeds the consuming capacity of the nation, 
unless that consuming capacity is enormously 
and viciously inflated by waste, and especially 
the culminating waste of war ; and yet it is 
patent that the needs of the individuals who 
comprise the community (whose collective 
needs are the only reason and justification for 
the existence of industry at aU) are far, and 
even increasingly far, from being met. There 

91 



THE CONTROL AND 



is one possible explanation for this anomaly — 
the financial system, which ought to be an 
effective distributive mechanism for the whole 
possible production of society, is defective — 
it does not so arrange the prices of articles 
produced as to enable the extant purchasing 
power to acquire them. 

Now without, for the moment, discussing the 
methods by which this defect can be remedied, 
let us imagine the remedy to be applied and 
consider its immediate effect on the unemploy- 
ment problem. There are still millions of 
persons wanting goods ; the productive system 
can make these goods ; the persons who want 
them can buy them, and those who make them 
can be paid for them. 

It seems obvious that an enormous stimu- 
lation to production would be provided — a 
stimulation which no mere propaganda on its 
desirability has ever succeeded in evoking ; 
and that the immediate effect of this would 
be a radical diminution of unemployment. 

Consider now the policy actually being 
pursued at this moment by the Government 
and the financial powers to deal with the 

92 



DISTRIBUTION OF PRODUCTION 

problem. They can be summarised in one 
sentence — the reduction of costs, and more 
especially labour costs. But labour costs are 
wages and form by far the most important item 
in the total purchasing power inside the country 
available for the distribution of goods. Even 
supposing that retail prices were reduced in 
exact ratio to wage reductions, which is highly 
improbable or even impossible, how is the 
distribution of goods to people in this country, 
which is the true object of British industry, 
thereby advantaged ? As the prices fall by 
this method, so the amount of money to 
purchase also falls, and we are as badly off 
as before, with the added complication of the 
discontent evoked by the reduction of wages. 

It would seem, then, that although a reduc- 
tion of prices in relation to purchasing power 
is not only vital in connection with the more 
fundamental problems of industry and society, 
but is the only effective method of dealing 
with the immediate problem of unemployment, 
we are not as a nation pursuing this policy, but 
rather one which, if not diametrically opposed 
to it, is yet wholly inapplicable to the situation. 

93 



DISTRIBUTION OF PRODUCTION 

Is it impossible to obtain adequate recognition 
of fundamental remedies, and equally im- 
possible to rouse the general public to a sense 
of tbe catastrophe towards which its passivity 
in the matter is hurrying it so swiftly ? 



U 



CHAPTEE IX 

A COMMENTARY ON WORLD POLITICS (l) 

Mr Balfour, in supporting the project of the 
League of Nations, stated with great im- 
pressiveness, and to an enthusiastic audience, 
that the League must come ; there is no 
alternative. Now Mr Balfour is a statesman ; 
a little passe perhaps, but still a statesman as 
distinct from a politician. It is highly prob- 
able that we differ from him in nearly every 
fundamental conception of what society ought 
to be and could be, and in the means that can 
profitably be employed to induce such changes 
as are necessary. But we have no doubt 
whatever that Mr Balfour has a personal code 
from which he will not depart, and that in- 
cluded in that code is a refusal to state clearly 
and definitely as a fact that which he knows 
or even suspects to be false. We emphasise 
this point because it is necessary to a grasp of 
the difficulties and dangers with which this 
country in particular and the world in general 

95 



THE CONTROL AND 



is beset at this time. Mr Balfour, then, a 
representative of the best type of the old- 
fashioned statesman, puts forward a plea in 
support of a project involving the most 
tremendous consequences, and separating 
Great Britain from every fundamental canon 
of procedure not only of the past, but of the 
** platform " on which the war was fought 
(if we except empty phrases), and this course 
is recommended to his hearers, not by any 
reasoned or inductive process of argument or 
demonstration, but by the council of despair 
that, lacking any idea of the right thing to do, 
we must do this. It would be incredible, if 
it were not so clear that every statesman of 
every country in the world has either suc- 
cumbed to panic, or retreated behind a barrier 
of phrases without concrete meaning or applica- 
tion to the course of events. Stripped of its 
verbiage and the mass of pious sentiment with 
which it is surrounded, what is the League of 
Nations, as projected on the basis of existing 
social, political and economic systems ? Its 
major premise is the avoidance of war, by the 
settlement of disputes at a centraUsed head- 

96 



I 



DISTRIBUTION OF PRODUCTION 

quarters, backed ultimately by the logic of a 
position which centralises the final argument 
of force under an elected committee, operating 
by means of permanent officials. The first 
permanent officials have been appointed, and 
may broadly be said to represent the Ultra- 
montane, or Temporal Power, section of Roman 
Catholic politics (said to be the only barrier 
between Europe and "anarchy"), by accom- 
modation and in accordance with at least one 
section of High Finance. Consider this pro- 
position, stripped of its sentiment, in the light 
of actual knowledge and observation of the 
working of such an organisation (quite apart 
from any question of personnel at all). The 
Post Office, for instance, is such an organisa- 
tion. It is in theory a Department ruled over 
by a Political Minister responsible to an elected 
body, the House of Commons. Does anyone 
in their senses imagine that the Postmaster- 
General could carry any point of internal policy 
in the Post Office against the settled procedure 
of the Permanent Officials ? Or that any attack 
by an individual from inside the Post Office 
on a system (as distinct from a person) which 
G 97 



THE CONTROL AND 



may press hardly on him has any chance of 
success ? But, it may be argued, we are going 
to change all that. We are going to have 
democratically elected committees to deal with 
all such questions. Very well, let us consider 
the actual working of such a committee. A 
grievance comes before it and a decision is given 
which may quite reasonably not give satis- 
faction, and the committee is attacked for it. 
It is an honest decision honestly given, and 
the committee combines to resist the attack. 
Immediately a position is created in which the 
committee represents a vested interest, and 
acts not as a body of elected representatives, 
but as an Institution whose power must be 
consolidated, and whose dignity must be up- 
held. Anyone with practical knowledge of 
committees knows that this is what happens. 
It may be said that all this is simply an argu- 
ment for anarchy (and it is the argument for 
anarchy), but that is a mistaken view, as we 
hope to show. 

Having got it firmly fixed in our minds that 
no conceivable change of heart has any bearing 
on the results of the arrangement we are dis- 

98 



DISTRIBUTION OF PRODUCTION 

cussing (we should imagine that from top to 
bottom, for instance, the Post Office is staffed 
with average kindly human beings), it is clearly 
vital to get some idea of where the difficulty 
does lie, since no difficulty is finally insuper- 
able ; and we have no hesitation in saying 
that the difficulty lies in the common confu- 
sion between organisation and administration. 
Organisation is a pure, if at present empirical, 
science ; its relation to administration is the 
relation between the Theory of Structures and 
the Strength of Materials. No personality 
enters into sound principles of organisation at 
all ; administration, on the other hand, which 
is an art, is wholly concerned with the satis- 
factory adjustment of individuality to organisa- 
tion. The distinction is vital. Let us apply 
it to the projected League of Nations, which is 
first of all an organisation of some sort, and 
an organisation presupposes some objective. 
We have seen that the very core of the League of 
Nations^ idea is power, final and absolute ; it is, 
therefore, an organisation expressly designed 
to eliminate administration by suppressing 
individuality ; to make the Machine finally 

99 



THE CONTROL AND 



supreme over the Man. And the alternative ? 
Let us return to our corpus vile, the Post Office. 
Imagine the Post Office to be organised 
exactly as it is organised (though it is highly 
probable that its organisation could be im- 
proved). Its administration admittedly is bad, 
for reasons, in our opinion, fundamentally un- 
connected with personnel. Leaving, we say, 
everything else exactly as it is for the moment, 
let us suppose a Regulation to be added to the 
few thousands which are now the chief exercise 
for the ingenuity of its staff, to the effect that 
all Post Office servants are at liberty to retire 
at will on a pension equal to their full salary. 
We admit that the traffic in St Martin's-le- 
Grand would be congested for some time, but 
supposing this initial period to have been sur- 
mounted by a reasonably well thought-out 
transition policy, we have no doubt whatever 
that a staff would be found at work, having 
realised that creative activity is a luxury, if 
not a necessity, of existence. Our hypothetical 
arbitration committees, however, are now con- 
fronted with a new situation — they have to 
find a solution of problems submitted to them 

100 



DISTRIBUTION OF PRODUCTION 

which will keep the complainant at work by 
preference, if it is to the advantage of the Post 
Office Service that he should he kept at work. If 
he is a pure crank, the Post Office will be better 
without him ; but if his ideas are sound — 
i.e. in the general interest of all concerned — he 
will be in a position both to defy economic 
pressure and to apply collective interest to the 
solution of his difficulties. The illustration is 
crude, but it may serve. The conclusion of the 
matter is that association for the attainment 
of an objective inevitably becomes a tyranny 
{i.e. an attack on individual initiative) unless 
it can be broken at any time, without incurring 
any penalty other than the loss of association 
itself. 

Before, therefore, the League of Nations can 
be constituted as that League in the interest of 
Free Persons, which it pretends to be, but is 
not, we have to place the Machine at the dis- 
posal of the Man. Given that essential, we 
can design or alter the Machine with the single 
object that it shall be the best Machine with 
which to attain a result having the full approval 
of the individuals without whose co-operation 

101 



THE CONTROL AND 



it cannot work, and this will involve not one 
organisation but many organisations in which 
the relation of the individual to the organisa- 
tion is not dissimilar to that of a man who is a 
director of several and possibly widely differ- 
ing companies. If he does not approve of them 
he resigns, and if a sufficient number of persons 
resign and are not replaced, then the activities 
of that concern are clearly not desirable, and 
it goes out of existence. Now the project at 
present known as the League of Nations can 
be seen to be the converse of all this ; if the 
individual or the nation does not approve of 
the objective of the League (which rests on a 
purely abstract and improbable assumption 
that its personnel not only represents the 
highest wisdom but an unearthly disinterested- 
ness), then that individual or that nation is 
eliminated, so that in theory no effective will 
remains save that which reaches its highest 
expression in the apex of the perfect Pyramid 
of Power, which is its object. We repeat, 
therefore, that in this project is the greatest 
and probably the final attempt to enslave the 
world, an attempt which is exactly similar, 

102 



DISTRIBUTION OF PRODUCTION 

and probably proceeds from exactly the same 
International source, as the attempt so recently 
failed, in which the German people were tools, 
blameworthy just to the extent that they 
allowed themselves to become tools ; and we 
believe that while it must finally fail, the 
measure of the misery in which its trial would 
plunge the world is such as to dwarf the 
horrors of the years so recently endured. We 
do not, therefore, agree with Mr Balfour, either 
that the League of Nations must come, or that 
there is no alternative to it, and we trust that 
the community in whose hands may lie the 
power will not be so blinded by the fine words 
in which its description is enveloped as to miss 
the meaning of the thing which is behind them. 
The most important report, issued by the 
United States Council of National Defence, 
entitled An Analysis of the High Cost of 
Living Problem, is a document (we are sorry 
to say), as might be expected, incomparably 
in advance of any similar official pronounce- 
ment which has appeared in this country. 
After pointing out that the problem is so inter- 
related with others that its consideration opens 

103 



THE CONTROL AND 



up the entire field of reconstruction, it goes on 
to remark that it is neither a new problem nor 
(under existing circumstances) transitory in 
character. Proceeding, it explains, in an excel- 
lently concise manner, the form of currency 
inflation which is produced by the lavish dis- 
tribution of money unrepresented by ultimate 
products in personal demand (which is exactly 
the situation our super-producers are striving 
to foster, whether by ignorance or otherwise 
is immaterial), and remarks " with dismay on 
the general flood of misinformation, half com- 
plete information and undiluted ignorance 
which . . . pervades the land regarding our 
current economic situation." We agree en- 
tirely with all this, and while the conclusions 
which the report draws as to the steps to be 
taken to deal with the situation are not so 
impressive (quite possibly for reasons over 
which the individuals who framed the report 
had little control), there is none of the glib 
claptrap about them which we are doomed 
to suffer in similar circumstances in this 
country. Compare all this with the solemn 
pronouncements of our only Mr G. H. Roberts. 

104 



DISTRIBUTION OF PRODUCTION 

After admitting that food is, on the whole, 
abundant, and that its alleged scarcity has 
little to do with high prices (a piece of informa- 
tion he might have derived from us about a 
year ago), he admits sadly that "it is un- 
doubtedly tme that at the present time the 
increase in supply has not brought about the 
decline that was expected by many ... in 
fact prices, so far from declining, have re- 
mained high, or shown some tendency to 
increase." 

After numbing his hearers with a mass of 
statistics to prove that we ought to be thankful 
that we are not worse off — most of which, when 
exchange is considered, prove exactly that we 
are worse off than our neighbours — he goes on 
to make the original suggestion that the cure 
is more production for export. Let us para- 
phrase Mr Roberts, and explain him to himself, 
as he clearly requires explaining. He admits 
that there is a sufficiency of goods. He even 
allows it to be gathered that supply is being 
restricted by artificial means. He knows that 
the world is complaining of high prices. He 
knows, if he will keep quite quiet, and think 
105 



THE CONTROL AND 



for a few minutes, that prices ultimately 
represent work, man-hours of labour. As a 
remedy for a complaint that prices representing 
work are too high, although he is being asked 
to distribute goods which already exist in 
sufficient quantity, he recommends more work, 
much more work, to be applied to the making 
of unspecified articles, in order to export the 
result out of the community which has per- 
formed that work. Mr Roberts concludes by 
assuring the Conference that they may be 
confident that the Ministry of Food is doing 
everything in its power to keep down prices, 
and that the power of the Government is 
strictly limited in this respect. 

We have no doubt Mr Roberts is entirely 
honest in making these latter statements, and, 
moreover, that, as distinct from his earlier 
remarks, he is entirely correct. Both the 
Ministry of Food and the ostensible Govern- 
ment, as a whole, are mere tools in the hands 
of the real Governments, and Mr Roberts has 
probably found out by now, if he did not 
suspect it when he accepted office, that he is 
paid to do as he is told. If he really knew 

106 



DISTRIBUTION OF PRODUCTION 

anything about the cause of high prices, and 
were determined to use his knowledge for the 
benefit of the country, he would not remain in 
office for ten days. But consider what he says. 
The Government — i.e. the Ministers of the 
Crown — represent in theory the collective 
interest of the nation. They are always saying 
so, so it must be true. Is there any collective 
interest of the nation which is more immediate 
and more vital than that of food prices ? If 
the Government has no power over prices — 
i.e. if knowing that there is a sufficiency of the 
articles required, in existence, they cannot get 
those articles distributed without making an 
immense quantity of goods for other countries 
which are not asking for them, and whose 
population, in any event, these Ministers do 
not represent, if, in other words, they cannot 
affect or modify the most elementary functions 
of society — then who can modify them ? And , 
if the real rulers of society are not in the 
Government, but behind the Government, who 
elected them, what interest do they represent, 
and what is the good of, say, Mr Roberts ? We 
feel sure that Mr Roberts is convinced that it 

107 



DISTRIBUTION OF PRODUCTION 

would be much better not to inquire too deeply 
into these matters, but at the same time he 
must recognise that he is certain to be asked 
about them sooner or later. We suggest, 
therefore, that the sooner the Hidden Govern- 
ments of the world are brought out into the 
open, and a decision is obtained on points 
which really matter, the sooner we shall know 
what sort of a New-World-for-heroes we are 
likely to get. At the moment it requires 
heroism for any but Cabinet Ministers to 
live in it. 



108 



CHAPTER X 

A COMMENTARY ON WORLD POLITICS (ll) 

Readers of these pages who are also readers 
of The Daily Telegraph will not have failed to 
notice the columns in the issue of that estimable 
journal signed by Sir Oswald StoU. He asks in 
parenthesis, " Who can deny that we are on the 
verge of a great financial and economic crisis ? " 
and goes on to say, " Hundreds of enterprises 
are held up by costs too high to admit of 
sane capitalisation ! Thousands of enterprises 
necessary to keep the economic wheel revolving 
are on the brink of failure because they cannot 
buy cheaply or sell dearly enough. ' ' (Our italics. ) 
After observing that " Financiers' finance, 
with its checkmates by rival groups, is ruining 
the country," and that " the aim of National 
Finance should be some prosperity for all 
Nationals, not all prosperity for some Inter- 
nationals," he points out the solution "... a 
true conception of National Finance and 
National Credit." This is all very gratifying 
to our prescience, if not to our humanitarian- 

109 



THE CONTROL AND 



ism. We have been saying much the same 
sort of thing publicly for four and a half years, 
and we think it highly probable that the " sane 
Labour leaders " who preside at Eccleston 
Square and elsewhere will hear from the brainy 
fellows who comprise their official and un- 
official general staff that Sir Oswald Stoll is 
in league with us, or vice versa. But they will, 
if only on this occasion, be wrong — not only 
has that happy consummation still to be 
reached, but, in the meantime, while agreeing 
absolutely with all the quotations cited above, 
and many others which space forbids us to 
include, we disagree totally with the conclusion 
drawn from them — that " Production on the 
great scale will save us." Now, some months 
ago, there appeared in the pages of Credit 
Power and Democracy this statement : "In 
spite of the apparent lack of enthusiasm with 
which any attempt to examine the subject of 
credit and price control is apt to be received 
in the immediate present, there is no doubt 
whatever that its paramount importance will 
within a very short time be recognised, 
although perhaps not so quickly by British 

110 



DISTRIBUTION OF PRODUCTION 

Labour as elsewhere. The real struggle is 
going to take place not as to the necessity of 
these controls, hut as to whether they shall he in 
the hands of the producer or the consumer.'* 
That is just exactly the point at which we join 
issue with Sir Oswald StoU, and the super- 
Productionists. The practical implication of 
their policy is a continuous rise in the level of 
prices of necessaries ; we look to a continuous 
fall in such prices. 

We believe it is no longer necessary to 
labour the point that whoever controls credit 
controls economic policy ; and it follows as a 
simple syllogism that just to the extent that 
control of food, clothes and housing is control 
of society, so producer-control of credit means 
the enslavement of society to Industrialism ; 
whereas the whole world now rocks to its social 
base in an efiort to subdue the dragon of the 
industrial machine in order that men may be 
free. Any housewife who ordered from her 
tradesmen " as much as you can send me of 
everything " would be deserving of, and would 
receive, reprobation, even in a time of scarcity ; 
but where the real capacity for supply is far in 
111 



THE CONTROL AND 



excess of any real demand, sucli an individual 
would be in danger of certification as insane. 
The public is the housewife, and its business 
is to order the right quantities of the right 
things in the right order, and to see that it gets 
them ; not simply " More." The productive 
system is easily capable of giving the public 
what it wants, if only producers can be salved 
from the unlimited task of giving the public 
what it doesn't want — e.g. " employment." 
The existing financial system exists by seeing 
that the public never gets quite enough of any 
one thing it wants ; by constantly diverting 
the productive organisation before it has time 
to finish any one task ; or else " sabotaging " 
the output ; and while we require for this 
reason at the moment " more " of the funda- 
mental necessaries of life, we do not require an 
indefinite amount even of these. As has so 
, often been emphasised in the foregoing pages, 
; the whole problem fundamentally resolves it- 
self into providing an organisation to get first 
: things first, with the minimum of trouble to 
everyone. 
One of the vital means to that end is to throw 
112 



DISTRIBUTION OF PRODUCTION 

overboard the superstition that " employ- 
ment " is the inevitable condition antecedent 
to " pay," and for this reason we welcome the 
support given by the numerous local Trades 
and Labour Councils to the resolution put 
forward by the Minimum Income League 
on the agenda of the Annual Labour Party 
Conference recently held at Scarborough. 
To students of the psychology alike of in- 
dustrial and of world movements (which is, 
in essence, identical) it requires an effort to 
avoid cynicism at the similarity in the real 
aims of orthodox Socialism and ultra-Capital- 
ism. The idolater of the State says : "I will 
make it impossible for you to live except you 
conform to my standard of conduct." Lord 
Leverhulme, amongst others, says very little, 
but, being more capable, obtains world control 
of essential products, and lays down a policy 
both for his employees and those who must 
have his goods. Bismarck understood the 
situation perfectly when, in speaking of the 
German Socialist Party, he observed : " We 
march separately, but we conquer together." 
The will-to-govern is identical in each case, 
H 113 



THE CONTROL AND 



Against this essentially insolent tyranny, the 
idea underlying, inter alia, the Minimum Income 
proposal, is the only defence, and we therefore 
congratulate its authors on the excellence of 
their achievement in planting it in somewhat 
difficult soil. But having said so much, we 
are bound to point out the ineffectiveness of 
the suggested mechanism, which is based on 
the error, made in company with others such 
as Professor Bowley, who, we think, ought to 
know better, that the national income equals 
the sum of the price-values of the national 
production. 

This would he true if all wages, salaries and 
dividends charged to 'production were used, at 
the instant they were earned, to buy the p-oduc- 
tion in respect of which they are earned. But 
they are not so used, and on this gap between 
production and delivery, which the complexity 
of modern co-operative production is widening, 
a mass of credit purchasing power is erected 
which never appears as income at all, and 
which is completely ignored by such proposals 
as that which we are considering. If A ordered 
a house off B, and B, having built it, lived in 
114 



DISTRIBUTION OF PRODUCTION 

it for ten years and then insisted on charging 
his rent to A in a lump-sum addition to the 
price, A would probably complain ; but when 
B put his overhead charges, the rent of his 
control of production, into the price of bricks 
for A's garage, A seems to regard it as an act 
of God, or, alternatively, of the King's enemies. 
Possibly he is right in both cases, but that 
does not alter the fact that A is being asked to 
pay, in prices, for something — viz. a period 
of use-value, past, and therefore destroyed and 
non-existent — of which the effective purchasing 
power never was distributed either as wages, 
salaries, or dividends — i.e. income — therefore 
income will not buy it. What may remain is 
the credit-value of this period of use, its 
assistance to future production, which may 
form a solid basis for a distribution of purchas- 
ing power possibly much in excess of the use- 
value charged in prices ; but A gets none of 
this. 

We admit the elusiveness of the argument ; 

it is one of those conceptions which, like the 

differential co-efficient in mathematics, to which 

it has a strong family resemblance, comes 

115 



THE CONTROL AND 



suddenly rather than by intellectual explana- 
tion. But it is, without any doubt whatever, 
of the essence of the contract, and failing 
provision to deal with it, we are bound to 
agree with the dictum of an opponent of the 
scheme in the correspondence columns of The 
Times who characterised the proposal (to pool 
20 per cent, of every income, dividing the pool 
equally over the whole population) as being 
the heaviest direct tax on the poor ever 
invented. The Minimum Income League has 
a great cause to fight for, and we are confident 
that its progenitors, if they will concentrate 
on the problem, can so modify their proposals 
as to still further assist in gaining a great 
victory ; and in any event we wish them luck. 
The fundamental point at issue will be still 
further brought into prominence by the next 
move in the strategy of the hard-shell Capitalists, 
which will be to concede unemployment main- 
tenance to wage-earners in consideration of the 
removal of all restrictions upon output and 
the acceptance of payment by results — an 
arrangement which really means the formation 

of comprehensive low salary lists, plus a 
116 



d 



DISTRIBUTION OF PRODUCTION 

percentage commission on output. We are 
not so mucli concerned to point out that this 
arrangement makes men " slaves " to an 
imposed industrial policy, because a large 
number of human beings are slaves already 
and quite a number of them like it ; but it is 
quite certainly a most ingenious device to keep 
them slaves, whether they like it or not, and 
we are sorry to see that the Building Guilds, 
which have been started in London as well as 
in Manchester, do not seem to grasp that fact, 
in their rather naive satisfaction at having 
incorporated the same principle in their con- 
stitution. The important point is not whether 
John Pushemup, of Messrs Cubitts, for ex- 
ample, builds houses or Mr James Articraft, 
of the London Building Guild, builds them — 
without knowing anything of the executive 
capacity of either, we do not know which is 
the right man for the job. But we do know 
that it makes very little difference to the 
result, after an initial short period, which 
organisation makes the rales, if either of them 
is in a position to lay down conditions to the 
public as to the use of the houses after they 

117 



THE CONTROL AND 



are built. That is exactly what this mainte- 
nance pay idea amounts to — that we shall all 
be nicely fed, watered, groomed and stabled 
if we will leave policy to the productive 
organisations ; and the pity of it all is that 
it won't work. 

Some years ago one of the largest State- 
owned industrial organisations in this country 
imported from a commercial firm the idea of 
the suggestion box, into which any employee 
of any grade from the highest to the lowest 
was invited to place any proposal either for 
the smoother and more efficient running of the 
organisation or for improvement in the pro- 
cesses of manufacture. An elected Committee 
was set up to deal with the matter, and a fund, 
for which a Government grant was obtained, 
provided a source from which rewards, varying 
from a few shillings to several hundred pounds, 
could be paid. On the whole, the scheme was 
a failure. During the first year of its life a 
flood of suggestions, good, bad and indifferent, 
from the Selection Committee's point of view, 
were submitted, many of them were paid for 

and some of them were acted upon. The 

118 



DISTRIBUTION OF PRODUCTION 

second year showed a great falling off both in 
number and quality, and in subsequent years 
a mere trickle of, in general, impracticable 
proposals, usually emanating from new-comers, 
was the only output, and what was probably 
worse, the general run of workmen in the under- 
taking openly derided the plan as a scheme to 
" suck their brains." (This in a "Nationalised '* 
undertaking !) As a consequence of consider- 
able familiarity with this and similar devices, 
we have no hesitation whatever in saying that 
the main cause of failure was not inadequacy 
of reward, or even dissatisfaction with the 
decisions of the Selection Committee, although 
both of these were alleged ; but was rather a 
subconscious irritation at the complete im- 
potence of the authors of the suggestions to 
superintend the process of giving their ideas 
a run. Now, each of these suggestions, where 
they were original, betrayed nascent initiative, 
and it is out of personal initiative that all 
progress of any description must come. In 
the case we have just instanced, it was possible 
to watch the strangling of initiative taking 
place ; and the explanation was also obvious— 

119 



THE CONTROL AND 



Tl 



that the great mass of individuals will not risk 
economic disaster — the loss of their job — for 
the sake of an idea. But it is highly probable 
that many most valuable additions to the 
knowledge of industrial organisation and pro- 
cesses were thereby lost to the community and 
are daily so being lost ; and only the grant of 
economic independence and the consequent 
freeing of personal initiative will stop this 
immensely important channel of social waste. 

That estimable journal The Spectator recently 
started a sort of symposium on the subject 
of " the Jewish Peril," both the book which 
has recently been published under that name 
and the hypothetical thing itself. Most people 
are no doubt familiar with the general legend, 
if legend it be ; it was the core of the Dreyfus 
case, which convulsed France some years ago, 
and is constantly reappearing in the guise of 
the Hidden Hand stories of various descriptions 
which crop up at any time of national crisis. 

It presupposes the existence of great secret 
organisations bent on the acquisition of world- 
empire and the overthrow of their " enemies," 
and directed by immensely wise men with all 

120 



DISTRIBUTION OF PRODUCTION 

the power which an almost superhuman know- 
ledge of psychology can bestow. Such an 
organisation would be capable of using Govern- 
ments as its tools and the lives of men as the 
raw material for the fashioning of its projects. 
Like The Spectator, we have no means of know- 
ing how much of this idea is pure moonshine, 
or even whether the whole matter is a malignant 
stimulus to anti-Semitism ; but, with that 
journal, we can understand that it might have 
some foundation in fact, and that, as it puts 
the matter, we have a good many more Jews 
in important positions in this country than we 
deserve. And not only in this country, but 
in every country, certain ideas which are the 
gravest possible menace to humanity — ideas 
which can be traced through the propaganda 
of Collectivism to the idea of the Supreme, 
impersonal State, to which every 'individual 
must bow — seem to derive a good deal of their 
most active, intelligent support from Jewish 
sources, while at the same time a grim struggle 
is proceeding in the great international financial 
groups, many of which are purely Jewish, for 
the acquisition of key positions from which to 

121 



THE CONTROL AND 



control tlie World-State when formed. We are 
anxious not to be misunderstood. We do not 
believe for a single instant that the average 
British Jew would countenance such schemes 
for a single moment, but in view of the curiously 
circumstantial evidence which is put forward 
to support such theories, and the immense 
importance of the issues involved, we agree 
that it is very much better that as much day- 
light should be allowed to play on the matter 
as may be necessary to clear it up. The 
alternative will be an outbreak of popular fury 
in which the innocent will suffer with the guilty, 
if there be any such. 

It is always difficult to know how much 
weight to attach to Press expressions of public 
opinion in the United States, and that difficulty 
is greatly enhanced at this time both by the 
immanence of the Presidential elections, and 
the selective censorship which our own Press 
exercises in its quotations. But there seems 
no reason to doubt the general tnith of the 
impression which is conveyed both by them 
and by a perusal of the American political 
reviews, that anti-British feeling is steadily 

122 



DISTRIBUTION OF PRODUCTION 

gaining ground, not only, and not even so much, 
in the eastern cities such as New York, Boston 
and Philadelphia, but in the Middle West and 
on the Pacific coast. Because of the constant 
flow of passenger traffic between Europe and 
the Eastern States, and the consequent tend- 
ency of European newspapers to quote Ameri- 
can journals with which they are familiar, there 
is an impression prevalent that the centre of 
gravity of American action is resident along 
the Atlantic seaboard. Such an idea is prob- 
ably far more mistaken than to imagine, for 
instance, that London opinion is British 
opinion. All through the Middle West, in- 
cluding such considerable cities as Chicago 
and Milwaukee, there is an actual numerical 
preponderance of people of definitely anti- 
British extraction — Milwaukee, in particular, 
is overwhelmingly German, while Chicago 
is politically in the hands of Irish emigrants 
largely of a generation having much greater 
and more solid grounds for hatred of British 
Governments than any which exist to-day. 
This population has on the whole not done 
well out of the war ; it is hit by high 

123 



DISTRIBUTION OF PRODUCTION 

prices, and irritated by all sorts of hindrances 
to peaceful progress, ranging from Labour 
troubles to a moribund railway system and a 
negro problem. Such a soil is the perfect 
matrix of an international hatred, and the 
seed of such a hatred, already dormant, is 
being cultivated with a skill and assiduity 
which should command our attention, if not 
our admiration. AH sorts of misrepresentation 
both of fact and of policy, particularly in 
respect of Ireland, Egypt and India, are 
circulated with an utter disregard either of 
essential truth or contingent circumstances. 
On the Pacific Coast, where Japanese ex- 
pansion is an obsession, our alliance with that 
country is a special reason for dislike, and is 
exploited to the utmost. This is not the place 
to examine at length the motives behind the 
persistent efforts to embitter the relations 
between Great Britain and the North American 
Republic — we have referred to some of them 
in previous issues — but to anyone who realises, 
as we do, the appalling horrors to which their 
success must lead, the situation is one to excite 
the gravest concern. 

124 



CHAPTER XI 

A COMMENTARY ON WORLD POLITICS (ill) 

Sir Oswald Stoll returns to his attack on 
the system of credit-control by financial 
groups, and although, as we said in a previous 
comment, we are quite assured that the pro- 
posals he adumbrates in his campaign are by 
themselves worse than useless as a cure for the 
present situation, we welcome the attention he 
cannot fail to attract to the problem as a whole. 
His text, in this case, is a quotation from a 
speech by the Chancellor of the Exchequer, in 
which the financiers are openly implored, as 
the controllers of the situation, to conserve 
" Capital " by which, from the context, it is 
obvious that the Chancellor means credit. 
It is a remarkable speech, and Sir Oswald is 
probably correct in stating that never before 
did a Chancellor of the Exchequer acknowledge 
in set terms the absolute control of the Govern- 
ment and the country by the financial com- 
munity. Just think what it means. Two or 

125 



THE CONTROL AND 



three great groups of banks and issuing houses 
controlled by men, in many cases alien, and 
even anti-British alien, by birth and tradition, 
international in their interests and quite 
definitely anti-public in their policy, not 
elected and not subject to dismissal, able to 
set at naught the plans of governments ; pro- 
ducing nothing, and yet controlling all pro- 
duction. We do not believe that there is a 
single considerable commercial organisation in 
this country or America, however apparently 
prosperous, which could live for two years 
against the active hostility of half-a-dozen of 
these men. To such. Ministers of the Crown 
are servants appointed to take orders, and 
dismissed if they are negligent in the execution 
of them ; wars, famine and desolation are 
simply mechanisms by the aid of which their 
control is conserved. Consider the railway 
systems of America : twenty years ago giving 
promise of forming a model transportation 
system ; to-day, looted, sacked and exhausted 
by one financial raid after another, they are 
almost in extremis, and only maintain a service 
which is a mockery to technical capacity, by 

126 



DISTRIBUTION OF PRODUCTION 

means of a grant from the public purse of a 
sum substantially equal to the original cost of 
their construction. Every one of the groups 
which were directly responsible for this result 
is represented in the city of London, and is 
included in the Chancellor's reference, just as 
they are represented in Paris and Berlin, and 
probably Moscow. Meanwhile, Dean Inge 
deplores the failure of democracy, and the 
Labour Party agrees that what we really want 
is more production, and the building trade gets 
on with building more — factories. 

We have always held that in America, where 
irresponsible financial control has been most 
blatant, and the results of it, taking natural 
resources into consideration, more obviously 
disastrous than even in Europe, there would 
come the first clear-cut and dangerous challenge 
to the system ; and the modest little an- 
nouncement which has crept into the London 
Press that representatives of a new party 
opposing the Democrats and Republicans 
alike, and not in sympathy with the Socialists, 
will meet at Chicago to nominate a Presidential 
candidate, is, if we mistake not, a justification 

127 



THE CONTROL AND 



of tliis opinion. The power behind this new 
movement is a composite one, involving the 
Non-Partisan League (which is definitely in 
possession of the machinery of government in 
North Dakota ; is said to control Minnesota, 
and is steadily gainirg ground in several other 
of the States of the Middle West), and a number 
of the Labour unions, including the Railroad 
Brotherhoods, who have revolted from the 
leadership of the egregious Mr Samuel Gompers, 
the latter individual undoubtedly one of the 
most valuable assets the trusts possess. "With 
these bodies are associated the Co-operative 
movement, the Consumers' League, and several 
quasi-religious organisations for social service, 
the whole making up a body of opinion which, 
if time permits, is definitely powerful enough 
to carry the policy it represents — essentially 
that of the public control of credit and price- 
making — against any other single party of the 
Republic. 

Mr Gompers, who is no mean politician, and 
is fully alive to the fact that his popularity is 
waning, has himself raised the credit issue with 
a demand for producer-contiol, coupling his 

128 



DISTRIBUTION OF PRODUCTION 

platform with a political strategy which, con- 
sists in urging his followers to support any 
candidate, either Democrat or Republican, 
who will pledge himself to assist in obtaining it, 
thus forming, in intention, a coalition against 
the new party of Economic Democracy. How 
far American trade unionists will thus allow 
themselves to be spoofed only time can tell, 
but the result of this alignment should be a 
matter of most absorbing interest, not only in 
the United States, but in this country, for it is 
not too much to say that the peace of the 
world and the future of civilisation may be 
involved in the outcome of the struggle. 

A deputation from the League to Abolish 
War, consisting, amongst others, of Mr G. N. 
Barnes, M.P., and Mr Frank Hodges, of the 
Miners' Federation, waited on the Prime 
Minister in June 1920 for the purpose of 
urging upon him the necessity of an Inter- 
national Police Force to do the bidding of 
the League of Nations. It is, at first sight, 
a little difficult to understand the mentality 
of Labour representatives who, while professing 
to be profoundly dissatisfied with the existirg 
1 129 



THE CONTROL AND 



state of society, and constantly concerned to 
accuse the Governments of all countries out- 
side, perhaps, Russia, of acting in the interests 
of the Capitalist system which they condemn 
(an accusation which is probably justified), 
and of using the police and other armed forces 
for the purpose of buttressing their power, 
yet propose to set up a mechanism expressly 
designed to make revolt against such Govern- 
ment impossible. 

We are not, for the moment, criticising the 
proposal itself ; we are merely considering 
the support of it by official representatives 
of a party openly pledged to revolutionise 
society. Now, assuming, as we are quite 
willing to assume, that both Mr Barnes and 
Mr Hodges are perfectly honest both in their 
desire for a better state of society and for the 
abolition of war, and that not being merely 
irresponsible lunatics, they have some reasons 
for figuring on such a deputation, it becomes 
of interest to see how they reconcile the fact 
that revolutionary Labour is notoriously 
unable to capture existing police forces, with 
a desire to build up a police force which is 

130 



DISTRIBUTION OF PRODUCTION 

ex hypothesi incorruptible. We believe the 
reason to be twofold. In the first place, Mr 
Barnes and Mr Hodges no doubt believe that 
they represent a Labour Party which is coming 
into political power all the world over, and 
that therefore they will control this police 
force ; and secondly, they confuse a remedial, 
if appalling, symptom, war, for the disease 
which causes it, much as one might ignorantly 
say that spots on the skin constitute measles. 

Both of these reasons are demonstrably 
unsound ; we will endeavour to show why. 
A modern Trade Union represents, not a body 
of individuals, but a monopoly more or less 
complete of an essential factor in production — 
i.e. Labour — differing in no respect in prin- 
ciple from a trust monopoly of, say, sugar, and 
Mr Barnes and Mr Hodges, in so far as they 
represent or have represented trade unions, 
represent this functional monopoly just as 
truly as the chairman or secretary of the sugar 
trust represents a sugar monopoly, and the 
object of both is identical — viz. to exploit the 
public, the consumer. There is not anyone else 
to exploit; the employer is utterly incapable 

131 



THE CONTROL AND 



of carrying a 25 per cent, rise in wages for 
a month if lie does not recover it from the 
public, and, conversely, will joyously grant any 
percentage of wage increase if he is assured 
that prices will recoup him. The party, if 
it can be so called, which is undoubtedly 
coming into power in the next few years all 
over the world, therefore, is not the " Labour " 
Party which Mr Barnes and Mr Hodges repre- 
sent, but a Public Party which will replace ex- 
ploitation by co-operation and in consequence 
will deal just as faithfully with the abuse of a 
" Labour " monopoly as with any other trust, 
and which will represent the men and women 
who now form the constituents of the Labour 
Party, not as monopolists of a commodity, but 
as human beings anxious to gain their legitimate 
ends by the most convenient and comfortable 
methods. In an economic system constituted 
as is ours to-day, we do not in the very least 
blame any monopolists, organised Labour in- 
cluded, for exploiting their advantage to the 
utmost : that is the way the game is played, 
and that is the sure and certain method which 
will break up society as we know it, though it 

132 



DISTRIBUTION OF PRODUCTION 

contains no promise of constructing a system 
to replace the ruins. But nothing is gained by 
idealising the process ; and the Labour Party 
and its ofl&cials are just as much a part of the 
capitalistic system as, say, the Federation of 
British Industries, and qua their representa- 
tion of a monopoly, just as pernicious. 

The second misconception, while one may 
have every sympathy with it, is none the less 
fatal to any effective remedial action. War, 
appalling orgy of waste and misery as every 
sane person must admit it to be, is not the 
greatest of all evils, although it may quite 
conceivably be a great enough evil to destroy 
this civilisation. A greater evil would be the 
unchecked operation in a helpless world of 
those causes of which war is an effect. That 
is exactly where what is commonly called 
pacifism makes its cardinal error — it is so 
concerned with the " rash " on the patient 
that it will go to any length to suppress it. 
Not that way lies a cure. The disease lies 
much deeper than the skin — is concerned with 
the vital processes of the body politic ; and to 
avoid substituting a more lingering horror for 

133 



THE CONTROL AND 



the sharp fever of war, it is necessary to restore 
these vital processes to health and balanced 
functioning. Now although we have insisted 
that the financial organism is the region 
demanding the most instant attention, it is 
not the whole of the problem, although the 
successful reconstruction of it would probably 
render easy the solution of the remainder. 
That lust for domination which may perhaps 
be said to lie at the root of the major evils 
of anti-public finance also operates, by the 
substitution of the motive of fear for the 
motive of gain, through the mechanism of 
bureaucracy. The business man assists in an 
unsound policy through the lure of reward 
and through cupidity — the bureaucrat winks 
at intrigue because of a fear, born of experi- 
ence, that his knuckles will be severely rapped 
if he doesn't. Merely to substitute cupidity 
(which, after all, as its name suggests, is only 
perverted affection) by fear would be a sorry 
exchange. The problem is essentially a practi- 
cal one, and we have no doubt whatever that 
the real inceptors of the deputation to which 
we refer (and who we feel positive do not 

134 



DISTRIBUTION OF PRODUCTION 

comprise either Mr Barnes or Mr Frank 
Hodges) are actuated by motives which, 
whatever else they may not be, are almost 
luridly practical. 

The proposition which has been aired dur- 
ing 1920 to increase railway rates another 
40 per cent., making 90 per cent, permanent 
increase over pre-war rates, raises, in an in- 
teresting form, the question of the applicability 
to this particular case of what is known as the 
law of diminishing return. It is probably 
quite familiar to readers of these pages — it 
postulates that there is a certain maximum 
" load " which any mechanism, economic or 
otherwise, will carry : below and above this 
load the output drops away, finally reaching 
minima. Now it has long been an axiom with ) 
railway managers that it was impossible to 
base railway rates on cost ; the only principle 
on which a railway system as a whole could be 
made to pay was to charge each separate class 
of trajfic " what it would bear " — i.e. the most , 
it would pay without revolt. The rich industry ' 
thus subsidised the less prosperous and the 
railway averaged their prosperity. This 

135 



THE CONTROL AND 



system had reached perfection before the war, 
and it is quite probable that in this country 
5 per cent, increase in any one rate would 
have raised a storm. It is now proposed that 
rates shall rise not 5 per cent, but 90 per cent., 
and that at a time when there are not want- 
ing interested persons (with whom we totally 
disagree) who would contend that the day of 
the railway is done and that road transport 
and aviation will carry the traffic of the 
immediate future. We say we disagree with 
such persons ; but we do not mean by that 
to suggest that it is not possible by means of 
crazy finance to ruin a magnificent asset, in 
order that a few international credit-mongers 
may acquire control of national transport. 
The bearing on this of the law to which we 
refer will be plain : if the rates on British 
railways before the war were as high as could 
be borne, and they were, then any further rise 
means a decreasing return and the speedy 
bankruptcy of the whole railway system due 
to the use of alternative, though not funda- 
mentally better, means of transport. 
Just as it is quite erroneously said that 
136 



DISTRIBUTION OF PRODUCTION 

threatened men live long, so there is a tendency 
as perverse as it is general to assume that it 
is only necessary to predict disaster of any 
description to form thereby a solid basis for 
optimism. For twenty years hundreds of 
men and women in this country, and thousands 
on the European continent, knew that, given 
the continuance of certain economic and 
political factors, war with Germany was just 
as inevitable as a chemical reaction. Certain 
social factors combined will produce certain 
social results, just as certainly as the com- 
bination by the aid of a spark of a mixture 
of oxygen and hydrogen will result in water. 
In 1900 the writer was told by an official 
of the German Foreign Office that there was 
not room in the world for a powerful Britain 
and a progressive Germany, and the reasons 
given, which required the major portion 
of a long and dull sea voyage for their dis- 
cussion, were quite conclusive if the premises 
of the financial system were admitted. In 
spite of the organised efforts of Lord Roberts 
and others to drive the facts of the situation 
home to those persons most vitally affected, 

137 



THE CONTROL AND 



the members of the British public, it is quite 
certain that not 5 per cent, of the population 
of these islands regarded the question as any- 
thing but a political " stunt " run by a mixture 
of interested scaremongers and cranks with 
bees in their bonnets. Viewing the situation 
dispassionately in the light of events, it seems 
probable that the control of the organs of 
public information, and the general psychol- 
ogy of the peoples who were to be the victims 
of the coming disaster, were already so grouped 
as to make the late war, humanly speaking, 
inevitable ; that any radical preventive pro- 
paganda, to have a reasonable prospect of 
success, must have been launched not much 
later than 1875, and must have taken effective 
steps, amongst other things, to deal with the 
capture and syndication of the public Press 
which marked the closing years of the nine- 
teenth century. But the situation in regard 
to the disasters which threaten us now is 
profoundly altered, and we believe that it is a 
practical proposition to expect to bring such 
forces to bear on the situation as will suffice 
to avoid at any rate the full force of the blow 
which might otherwise destroy us. Amongst 

138 




DISTRIBUTION OF PRODUCTION 

the differences on which legitimate optimism 
may be based is the increasing cynicism, 
common in every rank of society, in regard 
to the expression of beautiful sentiments un- 
supported by a live practical policy amenable 
to all the checks men apply to everyday affairs. 
The sob-stuff is losing its grip. By their fruits 
ye shall know them. Perhaps in some queer, 
perverted way President Wilson was indeed 
the saviour of the world, as he is said to have 
believed himself to be, when he heralded the 
entry of the United States into world politics 
by a series of speeches couched in the most 
silver eloquence, and embodying sentiments 
calculated to take the thoughts of men clean 
away from the facts of life ; and then, in 
company with his fellow-conjurers, hatched 
out a treaty and a League of Nations expressly 
designed to reduce every one of these beautiful 
sentiments to a grinning mockery. " Open 
covenants openly arrived at " ; Mr Lloyd 
George goes down to Lympne to discuss 
policy with Sir Philip Sassoon prior to 
reshuffling the destinies of peoples with 
M. Millerand; "self-determination" — and 
admittedly the ordinary everyday liberty of 

139 



THE CONTROL AND 



the subject fell during Mr Wilson's adminis- 
tration of the United States Government 
to a lower level than that of Russia under 
the Tsar. The practical effect of this dis- 
illusionment is seen daily in operation ; not 
so very long ago a rhetorical appeal for backing 
for the anti-Bolshevists was met by an un- 
mistakably dry negative even from quarters 
which have no love for Lenin and Trotsky ; 
the somewhat New-Jerusalemic tone of The 
Daily Herald is barely offset in its effect on 
its popularity by the realistic and detailed 
descriptions of the current prize-fights which 
form a feature of its otherwise pacifist pages. 
The general result of all this is to make it 
increasingly difficult to sweep a nation off its 
feet by a mere gust of emotion, and even if the 
change has not yet proceeded very far it is a 
most hopeful sign that it has begun. 

The Food Controller's monthly report issued 
in June 1920 ^ showing a further serious rise 
in the price of food since January, was a 

^ This paragraph was written in June 1920, and is 
included for the purpose of showing the development 
(which took place almost exactly according to plan) 
of Financial Strategy. 

140 




DISTRIBUTION OF PRODUCTION 

grim comment on the attempt made to 
inaugurate what the French have christened 
la vague de haisse, by the simple process of 
saying that it has arrived. So far from a wave 
of falling prices having reached either us or 
them, the level of prices steadily rose, and 
reached in this country 265 per cent, of 
the prices ruling for foodstuffs in July 1914, 
and there is every prospect that, with a possible 
temporary decline, it will continue to rise. The 
real cause can be stated in half-a-dozen words 
— the breakdown of credit ; the disbelief in 
the reality of " money " as a good exchange 
for either goods or services ; and there is 
nothing in the line being taken either by the 
Government or the large industrial combines; 
to show that they have either the will or the j 
understanding necessary to close the rapidly j 
widening gap between financial credit and real 
credit. It is now being allowed to transpire 
that the big manufacturers of the Midlands and 
the North are finding the way very hard in- 
deed, their costs are such as to make their prices 
definitely non-commercial ; and dark hints of 
the necessity of shutting down their plants for 
141 



DISTRIBUTION OF PRODUCTION 

the purpose of bringing labour to its senses — i.e. 
starving it into submission — are appearing in 
the columns of the Press. It is of course an 
open secret that this latter plan was concocted 
and agreed to by a ring of manufacturers in 
1917 as being the inevitable result of con- 
cessions extracted from them during the war, 
but it was intended that it should be put into 
operation much earlier, and we very much 
doubt whether it may not now have results 
quite other than those expected by its in- 
ventors. What about the necessity for greater 
production ~SLS^a, cure for all evils ? Surely 
if it is only production per se that we want 
it is very reprehensible for the employer to 
consider for a single instant a policy which is 
not merely designed to limit production, but 
to stop it completely, when for so long we 
have been told that only greater production 
will save us. Can it be possible that the only 
production it is desired to increase is the pro- 
duction of money, and that if more money can 
be produced by making less goods we shall get 
less goods ? The next few months should 
furnish an answer to that question. 

142 



CHAPTER XII 

A COMMENTARY ON WORLD POLITICS (iv) 

If Macaulay's New Zealander, after musing 
on the more material remains of our social 
system as exemplified in the Houses of Parlia- 
ment and the secretariats of Whitehall, should 
be driven to investigate the concepts of 
national organisation symbolised by them, it 
is fairly certain that nothing will astonish him 
more than the evidences he will find on every 
hand of the persistent and touching faith of 
this queer old people in what they call " repre- 
sentation." He will find that this curious 
superstition (dating back to the earliest days 
of their history, when priests made a corner 
in deals with God and the dispensing of 
personal salvation became a close trust) per- 
sisted on even through the First World War 
when millions of persons who disliked war and 
held it in contempt as a moral and material 
anachronism allowed their representatives not 
merely to lead them into a war which had 

143 



THE CONTROL AND 



become inevitable but, almost without a 
protest, to throw away any poor consolation 
which might be derived from a real " war to 
end war." He would note that at irregular 
and inappropriate intervals queer ceremonies 
called elections took place at which persons 
for the most part personally unknown to the 
electors were " returned " for the ostensible 
purpose of carrying out " reforms " which 
most of the electors neither understood nor 
cared about one fig. And he would further 
observe that these elected ones, once safely 
through the ceremony, at once became very 
superior persons, full of dignity and im- 
portance, and for the most part concerned with 
very intricate relations between the State and 
Borioboola-Gha. It seemed clear that these 
same electors never derived any benefit from 
these negotiations, or in fact and on the whole 
from more than the very minutest fraction of 
the activities of their representatives, while 
further it was quite plain that a small number 
of very opulent gentry of international sym- 
pathies, who were not elected, and represented 
no one but themselves, did in fact sway the 
144 



I 



DISTRIBUTION OF PRODUCTION 

whole deliberations of the elected assembly. 
Still this touching faith that some day they 
would elect the right men and all would be 
well seemed to sustain the people through a 
series of disappointments which would have 
daunted a less stubborn race. The New 
Zealander, who we must suppose to be an 
intelligent man, would, we think, conclude 
that this was a matter outside logic and 
reason, and only comparable to collective 
hypnotism. And he would be right. 

In certain things this country in particular 
is under a spell. At the time of the Armistice 
there was not only not an unemployed man 
in this country, but there was hardly an un- 
employed woman or child over fourteen and 
under eighty. The wheat cultivation was 
increasing at a rate unknown for generations, 
shipbuilding was proceeding at such a rate 
that the destruction of war has been more than 
made good in two years, manufacturers were 
becoming rich, workmen were becoming manu- 
facturers. Even the despised professional 
classes were for the most part able to eke out 
a precarious existence in either the fighting 
K 145 



THE CONTROL AND 



services, or if age or health precluded that, 
in ministering to the wants or patching the 
digestions of those who did well out of — a long 
way out of — the war. Production, which 
Mr Clynes will tell us is all we need to make 
us prosperous, reached heights far in excess 
of anything ever touched in history, even out- 
stripping such destruction as Dante never 
dreamed of. Then peace, with the wings of a 
dove, burst upon us. Hardly had the last 
stretcher-case reached a casualty clearing 
station in a grim and haunted silence than a 
bleat of real anguish rose from these sheltered 
shores — not from the battered wrecks in 
hospital blue, the sad-eyed women in black, 
or even from the new poor, but from Lord 
Inchcape and other bankers. We were a poor 
nation — no homes for heroes for us. Perhaps, 
if we all worked harder than ever, and lived 
the simple life for twenty years or so, we might 
aspire to a few Nissen huts. As a preliminary 
to all of us working harder prices rose 50 per 
cent., and the unemployment figures rose from 
nil to the present figure of about three million. 
But further than that, the earnings, as apart 

146 



DISTRIBUTION OF PRODUCTION 

from the wage rates of those still employed, 
fell also. On every hoarding may be seen 
auctioneers' advertisements of eligible modern 
factories equipped with the finest tools to be 
sold at break-up prices, and manufacturers are 
beginning to compete with generals for eligible 
if undistinguished posts under the Holborn 
Borough Council. It is hardly to be wondered 
at that our warnings of a greater and more 
terrible war leave numbers of persons very cold, 
since only destruction on the largest scale, it 
seems to them, can provide a decent living for 
the survivors. Side by side with these hap- 
penings, which are plain for all to see, it cannot 
have escaped notice that every bank composing 
the charmed Circle of Five has pulled down its 
barns to build larger. The London City and 
Midland, to take one instance only, now has 
fifteen hundred branches, of which, at a guess, 
at least one half have been opened since 1914 
in buildings of a solid magnificence appropriate 
to the temples of a great faith. Perhaps one 
of our readers with a taste for statistics will 
compile a table showing the percentage of 
corner sites occupied by banks as compared 

147 



THE CONTROL AND 



with those occupied by other undertakings. 
Has anyone durirg this time of industrial de- 
pression and labour distress noticed any bank 
premises for sale ? Is there any possible room 
for doubt, not merely who did best out of the 
war, but is doing well out of the peace ? 

It might be noted from his article in The 
Daily Herald of 24th March 1921, entitled "The 
Coal Crisis and the Nation's Credit," that Mr 
Frank Hodges " has been propounding up and 
down the country a scheme which is the only 
internal scheme calculated to help the mining 
industry out of its difficulties and consequently 
other industries out of theirs." We wish Mr 
Hodges every success in his efforts, which aim 
at the use of national credit to enable coal to 
be sold below the cost of production, and we 
would offer him every assistance, technical 
and otherwise, to enable him to carry properly 
designed proposals of this character to a 
successful issue. His article in The Daily 
Herald was, we think, admirable for the 
purpose for which it was intended, but we 
would suggest to him that a combination of 
his propaganda with a new and more effective 
148 



DISTRIBUTION OF PRODUCTION 

form of " Direct Action " would be very- 
desirable at this time. He suggests that 
" the British Government " should either 
propose something better or put his scheme 
to the test of practice. We can assure Mr 
Hodges that the British Government, or that 
essential part of it which counts in matters of 
this sort, has no intention or desire to propose 
anything better — on the contrary, it has said 
in so many words that it is unalterably opposed 
to any proposition which involves the granting 
of a subsidy, and it is prepared to go to any 
amount of trouble and expense to prevent 
Mr Hodges making clear to any considerable 
number of persons how this proposal differs 
from one involving a subsidy. But if Mr 
Hodges will abandon the idea, so natural to 
ingenuous minds — we have had it ourselves — 
that the Government is struggling with a 
problem it does not understand and cannot 
solve, and ceasing his endeavours to enlighten 
it, will use the position entrusted to him 
to assist his constituents to dispense with 
Government acquiescence with his plan (and, 
of course, he must know that that is possible) 

149 



THE CONTROL AND 



we feel sure that he will be astonished at the 
quickened apprehension of Westminster. 

At the time of writing (1921) the miners' 
strike or lock-out, whichever it should be termed, 
has commenced, and according to the popular 
Press a number of pits are already irretrievably 
flooded. Lest the public should be in any 
doubt as to who pays for these little wrangles 
between the Coal Trust and the Labour Trust, 
the price of coal has been put up Is. per ton 
at once just to " larn us to be a twoad." Our 
sympathies as between the two combatants 
are wholly with the Labour tnist, because it 
contains more human beings, but they are a 
good deal more with the public than with 
either party, and we think we are not alone in 
the matter. It is quite time, we think, that 
the great trade unions should understand 
that the plea of the under dog, fighting against 
unfair odds of education and resources and 
injuring the bystander only because engaged 
in a life-and-death struggle, will not wash. 
The resources of, say, the Triple Alliance, are 
ample to put them in possession of every 
weapon in the hands of their antagonists — 

150 



DISTRIBUTION OF PRODUCTION 

are, in fact, potentially far superior ; and the 
fact that they are quite obviously incapable 
of striking a blow which the vile body of 
the public does not receive instead of the 
" Capitalists," at whom it is aimed, might 
quite reasonably, and will, be adduced as a 
good sound reason that they are a public 
nuisance. That would be a superficial judg- 
ment, but we do suggest that clumsiness and 
ineptitude are now as inexcusable as real vice, 
and that the great causes of which the Trade 
Union and Labour movement claims to be 
the protagonist, and of which it is, in fact, 
the natural champion, should not be allowed 
much longer to be so compromised by mis- 
management as has most unquestionably been 
the case during the past three years. We have 
said elsewhere that the British Labour Party 
in particular had an opportunity during the 
years 1914-1918 such as probably never before 
presented itself to any political party. That 
opportunity was missed thoroughly and com- 
pletely, and the credit and power of the 
Labour Party is so damaged that it is quite 
possible that it may never recover. " The 

151 



m 



DISTRIBUTION OF PRODUCTION 



moving finger writes, and having writ moves 
on," and not often, if ever, is a second innings 
vouchsafed to any side in a game of this 
magnitude. We see only one hope for the 
Labour Party ; that it may, by a miraculous 
uprush of leadership, renounce its absurd 
arrogance of all the virtues, and by truly 
representing the community, rather than a 
mere sectional interest, draw again to its aid- 
all those men of good-will in whatever station 
they may be found whose good offices it now 
seems so anxious to repel. If it will not do 
this, and do it soon, it will sink to the im- 
portance of the British Bolshevik Party, which 
is negligible except as a useful bogey, by the 
aid of which Mr Lloyd George can frighten 
old women of both sexes into voting for the 
Sassoon-Cassel-Zaharofi coalition. 



152 



CHAPTEK XIII 

A COMMENTARY ON WORLD POLITICS (v) 

If anyone is disposed to doubt our native 
genius for organisation we would direct his 
attention to the team-work of the Press 
on the subject of Mr Frank Hodges' timid 
suggestion of a credit appropriation for 
the solution of the coal difficulty. In many 
keys, yet in perfect harmony, a shriek of 
horror has risen from organs professing all 
shades of political opinion yet united by the 
approach of a common danger to their financial 
masters. It is true that most of them, as 
newspapers, have no more knowledge of the 
processes of finance than is necessary to enable 
them to draw or cash a cheque, but, aided by 
some mysterious sense, none of them has failed 
to translate the proposal by exactly the same 
word " Subsidy." And the concern of them 
for the poor taxpayer ! Was there ever any- 
thing so touching ? Happy the nation which 
has a Press so active and sensitive to the 

153 



THE CONTROL AND 



interests of its constituents. But there is 
more still to be done, and, without for the 
moment quibbling over the confusion involved 
in the misuse of words, we would direct the 
attention of Fleet Street to the great activity- 
supported from Downing Street and the city 
which is taking place in regard to various 
schemes for Export " Subsidies," such as the 
Ter Meulen and Sir Edward Mountain pro- 
posals. Mr Hodges admits that a sum of 
£100,000,000 might be required for his pur- 
poses, but it is hardly denied that this sum 
would be represented by an increased dis- 
tribution of coal in this country, since the 
increased purchasing power would not be 
reflected in an increased price for coal. That 
is to say, the " subsidy " would be repre- 
sented by goods in this country. But the 
various Export " Subsidy " schemes con- 
template the use of sums at least five times 
as large as that for which Mr Hodges is asking, 
and still taking Fleet Street's word that a 
subsidy and a credit are the same thing, the 
distracted British tax-payer would be fleeced 
to ten times the extent to which Mr Hodges 

154 



DISTRIBUTION OF PRODUCTION 

would subject him ; he would not only have, 
ex hypothesi, to find five hundred millions in 
taxation, but would be mulcted by a rise in 
the general level of prices due to the distribu- 
tion of five hundred millions of money un- 
represented by any increase of goods in this 
country. May we hope that, the point 
having been indicated, Sir Edward Moun- 
tain's Export Subsidy Scheme will now 
receive the same candid and uniform treat- 
ment as that accorded to poor Mr 
Hodges ? 

Where Mr Hodges and the miners fail in 
strategy is that they do not seem to realise 
the fundamental weakness of their case as 
miners, and the immense strength of it as 
members of the public. We thoroughly recog- 
nise that the very worst and blackest aspect 
is put on their demands, but the elementary 
fact is that even as put by themselves there is 
nothing about them to compensate the public 
at large for the expense and inconvenience to 
which it is put by a strike. Outside the war 
profiteers, who, after all, are the merest tithe 
of the population and are congenita lly selfish, 

155 



THE CONTROL AND 



there are very few classes in this country who 
are not far worse oS financially than they were 
in 1914, and the classes who have lost most are 
those who, while saying least, think the more 
and exercise by far the most vital influence on 
affairs in a time of crisis. If instead of con- 
tinually trumpeting their determination to 
raise their own standard of living, no matter 
who suffers in the process, the Triple Alliance 
would say, " We intend that the general 
standard of living in this country shall rise, 
and we mean to proceed, not by attacking 
anyone, but by assisting everyone — by first 
demanding a conference of all parties for the 
purpose of exploring every avenue which might 
lead to lowering the cost of living without 
lowering the income of anyone," they would 
be invincible and would carry their own ends 
by a side wind. No altruism is required or is 
desirable — if every rich man in this country 
sold all that he hath and gave to the poor, 
the poor would only notice it for about three 
months, and after that would, under the con- 
ditions which the Labour movement has not 

so far challenged, starve to death through 

166 



DISTRIBUTION OF PRODUCTION 

unemployment and tte failure of production, 
just as happened in Russia. As it is, a con- 
viction is hardening in the country that, bad 
as things are, they would be simply intolerable 
if the Labour Party ever got into power. That 
psychology is disastrous, and when over some 
such issue as the present the Prime Minister 
decides to appeal to the country, it will result 
in his being returned with a majority which 
will be acclaimed as a mandate to put Labour 
exactly where Sir Alfred Mond and his con- 
freres wish to see it. 

Mr Hughes' note to the Allied Powers, which 
may be considered as the first official pro- 
nouncement on Foreign Policy issued by the 
Harding Administration, is a sufficiently dis- 
quieting document. In the details of its 
comments on the Yap controversy and its 
demand for a share in the loot of Mesopotamia 
there is, of course, nothing new. The note- 
worthy content of the dispatch is the considered 
enunciation of a new Monroe doctrine em- 
bracing the whole world, and the intimation in 
effect that the other World Powers have been 
wasting their time in disposing (so far as they 
157 



THE CONTROL AND 



have disposed) of the problems contingent on 
the Peace Treaty — that nothing can be done 
without the acquiescence of the United States, 
and that as the United States has not acquiesced 
in what has been done, it is all null and void. 
Passing over the nice judicial point as to 
whether a nation which has been invited and 
has refused to take part in the deliberations 
which have led to the allotment of mandates 
and other little spoils of war is justified in 
objecting to the results when they are a more 
or less accomplished fact (because the only 
real sanction behind such an attitude is the 
will and the power to impose acceptance of it 
by force of arms), we may profitably consider 
exactly what is the position created by such a 
claim. If Washington is alone in making it, 
it is clear that the United States is claiming 
the position of the super-State, the ultimate 
arbiter of all things mundane. But if, on the 
other hand, she is only claiming a right which 
she is prepared to allow to others, then once 
again we are brought up against the question 
of sanctions. Suppose Montenegro should ob- 
ject to the future course of events in Mexico ? 

168 




DISTRIBUTION OF PRODUCTION 

Will Washington agree that all action in 
Mexico must be held up until Montenegro is 
placated ? It requires some optimism to 
believe it. 

The curious point about the old Monroe 
doctrine, which is not without interest in con- 
sidering the new variant, is that probably 
more than anything else it has consistently 
handicapped the United States in her relations 
with South America to which it chiefly referred. 
While not above invoking it when occasion 
served, the peoples of the Latin republics 
derided it in conversation as a piece of 
unsolicited impertinence, and visited their 
resentment on the head of the unfortunate 
" Norte Americano," both by trade discrimina- 
tion against him and by direct personal dislike, 
with the result that, at any rate prior to 1914, 
he was easily the most unpopular national south 
of Panama. In itself there is, of course, no 
doubt that the Monroe doctrine was in the 
best interests of South America, and in- 
cidentally of this country, which always con- 
sistently supported it, but it is, nevertheless, 
incontestable that things being as they are, 
159 



THE CONTROL AND 



it was one of the ulterior forces concerned in 
the late war. Germany had acquired pre- 
dominating commercial interests in Brazil, 
and only the Monroe doctrine and the British 
fleet stood between her and the annexation 
of a dominion larger than the United States 
and rich beyond the dreams of avarice — a 
country only held back by the incompetence 
and laziness of the Portuguese settlers. Pre- 
sumably, although we have no information 
on the point, German interests in Brazil have 
suffered eclipse ; it is certain that the United 
States have been making the most strenuous 
efforts to replace her not only in Brazil, but 
in the Argentine, where she was obtaining large 
financial power through her banking system ; 
but the resentment of overlordship excited 
by the rather crude tactics of Washington is 
so strong that we may hazard a guess that 
our exporters are not doing very badly. 

When a man is entirely destitute of know- 
ledge and ideas in regard to the industrial 
situation, one of two pronouncements may 
safely be expected of him in regard to it. If 
he is of the traditional type of beef-eating 
160 



i 



DISTRIBUTION OF PRODUCTION 

Briton chiefly met with in country districts, 
who will endure anything if only he is not asked 
to think, he will probably bark out " Labour ? 

D d scoundrels ! put 'em up against a 

wall and shoot 'em ! " No one with a sense 
of humour ought to dislike this hearty ruffian, 
even if driven by uncontrollable impulse to 
throw a bucket of water over him. In the first 
place, he is no more responsible for his opinion 
than a terrier howling at Beethoven, and in 
the second place, however silly his method, his 
instinct is healthy — he wants a solution. The 
other person is in a different and, to us, much 
more contemptible category — he feels sure 
that all would be well if " both sides " would 
only show a little good-will. This man may 
not know it, but he is blasphemous. One of 
the most amazing features of the present 
situation is the steady bias towards good-will 
and reason met with everywhere — the preva- 
lence of a subconscious feeling that an effort 
is being made to get honest men to fall out 
in order that thieves may break through and 
steal. It is particularly noticeable on the 
railways, where every grade seems anxious to 
L 161 



THE CONTROL AND 



discount the inconvenience it anticipates being 
forced to inflict on the public. The writer has 
been privileged to address various meetings 
up and down the country on Credit Reform 
proposals, at most of which have been present 
one or two unhappy-looking individuals whose 
ideals evidently did not agree with their 
digestions, or, perhaps, proceeded from them ; 
but no one could mistake the isolation of their 
position. Most of these audiences either of 
so-called " masters " or " men " consisted of 
individuals actually grappling with the facts 
of industry, knowing the virtues, failings and 
common humanity of their neighbours, and 
well disposed to agree that a third party, 
Finance, understood by neither of them, might 
be the agency which for ever seemed to make 
agreement impossible. That there are small 
bodies of irreconcilables we agree ; but if 
the main body of citizens had a sound lead 
we do not think that these warriors would 
count for very much. 

There may be various opinions about Mr 
Lloyd George (known for obvious reasons, in 
political circles, as " The Goat ") as a Prime 

162 



DISTRIBUTION OF PRODUCTION 

Minister, but it is impossible to deny him the 
very highest honours both as a strategist and 
as a political acrobat. His method of testing 
the electioneering temperature by calling out 
the reserves and imploring all loyal citizens to 
enlist in the Volunteer Defence Force during 
the late coal strike is very expensive to the 
tax-payer and very bad for the moral of the 
country, but gives him quite a fair idea of 
the votes he would get in the election he 
is doubtless considering. Having tested the 
temper of the country in this way, we may 
confidently expect him to go to the country 
at an early date and be returned to power 
with a substantial, even if slightly dimin- 
ished, majority. In the unlikely event of 
his deciding that an election would be in- 
opportune he will no doubt pose as the 
saviour of the country from the civil war we 
haven't noticed. Either way, it all seems 
clear gain to Mr Lloyd George, and it is very, 
very clever. "Whether a little wisdom would not 
be worth more to the country, and to Mr Lloyd 
George himself, than all this agility is, of course, 
a matter on which one may hold strong opinions. 

163 



THE CONTROL AND 



It has always been incompreliensible to us 
that anyone could imagine that a body of men 
of the magnitude of, say, the Triple Alliance, 
beaten by starvation or force into accepting 
terms, distasteful to them, could fail to renew 
the struggle at the earliest possible moment ; 
and we can only conclude that the International 
Financial Groups who precipitate these 
struggles do not really care how frequent they 
are — the cost of them is simply passed on to 
the public in prices, and the real authors of 
them not merely go completely untouched 
by the repeated tragedies, but from villas on 
the Eiviera or elsewhere " glut " their love 
of power by contemplating the writhings of 
the world they have enslaved. 

Dr Leighton Parkes, Eector of St Bar- 
tholomew's Episcopal Church, New York, 
stirred up a hornets' nest by stating that " the 
Koman Catholic Hierarchy in this country 
[United States] desires nothing more than to 
bring about a war with England, not only on 
account of the ancient grudge, but because 
England is the great Protestant country of 
Europe as we are in the Western Hemisphere." 

164 



I 



DISTRIBUTION OF PRODUCTION 

We think Dr Leighton Parkes is to be con- 
gratulated on his plain speaking. It is quite 
certain that the fundamental difierence be- 
tween political Roman Catholicism and political 
Protestantism (all religions are the basis of 
political systems) is that the first is essentially 
authoritarian and the second is individual- 
istic. There are thousands of English Roman 
Catholics who are such because they are 
attracted by the beauty and dignity of its 
ritual and the artistic impact of its code of life. 
But the simple fact remains that when stripped 
to its essentials the Roman claim is a claim 
for the surrender of individual judgment and, 
in any important crisis, of individual action. 
That is one reason why Roman Catholics are 
so successful in the army, and it is the great 
reason why the Hierarchy of Rome, as apart 
from the many delightful personages to be 
found in it, is a danger to peace, freedom and 
development, wherever it is entrenched. 



165 



CHAPTER XIV 

" THE MOVING FINGER WRITES . . ." 

It is now nearly three years since the first 
publication of the credit theory which has 
become, it is hoped, more familiar than seemed 
likely at that time. When that theory first 
saw the light of publicity the world, panting 
and enfeebled from the first world war, was 
threatened with social upheaval and torn with 
conflicting idealisms on the one hand, and a 
prey to the megalomaniacs of industry and 
finance on the other. " All power to the 
Soldiers and Workers Councils ! " yelled the 
Left. " Increased production," murmured 
Lord Inchcape, as he passed the plans for a 
few hundred new branch banks. 

Well, they have all had their way. The 
greatest undivided unit of the world's surface, 
a national territory which could accommodate 
comfortably the United States and the whole 
of non-Russian Europe within its boundaries 
and still have vast expanses unoccupied; an 

166 



II 



DISTRIBUTION OF PRODUCTION 

area which is probably far richer in potential 
resources than any other under one control, 
has been nominally ruled for more than four 
years by the first Workers Republic. In 
that short space of time millions of the class 
in whose interests it is alleged that the Soviet 
Republic was created have been reduced to a 
state of famine and misery far in excess of 
anything experienced under the corrupt and 
inefficient regime of the Tsar. The control of 
the individual worker over his life and destiny, 
so far from having increased, has become a 
mere mockery, and the only tolerable portions 
of Russia appear to be those in which the writ 
of the centralised despotism of Moscow does 
not run. A new era is opening; enter Herr 
Stinnes and Mr Hoover. 

In Great Britain and America the working 
out of the dominant policy has been equally 
instructive if only less immediately disastrous. 
Following on the gigantic expansion of plant 
which took place during the war, the year 
1919 and the early half of 1920 saw still more 
factory and real capital production, accom- 
panied, for reasons explained many times in 

167 



THE CONTROL AND 



these pages, by a continuous rise in prices. 
Lord Inchcape has got his branch banks. 
Homes for heroes are still under strength. 

In May 1920 the financial powers considered 
that the process had gone far enough and 
withheld further facilities, and in a period of 
less than eighteen months, of the many 
ambitious enterprises floated at the expense 
of the public in the immediate post-war period, 
probably 95 per cent, have come into the 
complete control of the Joint Stock Banks, 
and not one of the remainder can carry on for 
a year except with their permission. The 
banker, busily engaged just now in sorting out 
from his catch those specimens worth, from a 
banker's point of view, preservation, condoles 
with the manufacturer and trader, who doesn't 
quite know what has hit him. " Ah, my dear 
fellow," you can hear him say, " if only those 
damned lazy scoundrels of yours had worked 
harder and consumed less ! Wait a bit : sell 
your car and live quietly for a few months and 
we may be able to put you back into your own 
works as manager, and then you can teach the 
blighters what's what. In fact we'll take care 

168 



DISTRIBUTION OF PRODUCTION 

that you do, if you want to hold your job. 
Good-morning, my dear fellow." 

(It will be noticed that while prices of retail 
or ultimate commodities rose during the period 
of credit inflation almost directly in propor- 
tion to that inflation, the stringency has failed 
signally to produce a corresponding fall : a 
result which confirms the credit theory that 
while prices can rise to any height under the 
stress of financial or effective demand, they 
cannot fall below costs, which include all credit 
issues, without bankruptcy of any entrepreneur 
who has not access to the general credit.) 

Meanwhile the Labour Movement in this 
country and in America has met its Waterloo. 
Headed very vigorously and firmly away from 
one or two timid approaches to a consumers' 
policy, such as the demand for a trifiing reduc- 
tion in the price of coal, and bound hand and 
foot to an economic theory identical with the 
capitalism it professes to attack, it is now 
firmly established in the public estimation 
as an anti-public interest. Endowed by the 
circumstances of the war with such an op- 
portunity as no one political party ever had 

169 



THE CONTROL AND 



before or probably ever will have again, the 
Labour Party both in Parliament and out of 
it has proved to demonstration that because 
its structure is fundamentally identical with 
that of other political parties it moves more 
or less slowly along similar lines to those of 
its competitors, depending as to pace on the 
qualities of its personnel. They can change 
the pace but they cannot change the direction. 
That direction is merely to centralise or focus 
whatever power is resident in the interest 
for which the party stands, and it is patent 
that labour, simply as a component of the 
productive process, is fundamentally a dying 
interest. 

Had the miners' strike, or lock-out, occurred 
twenty-five years ago it would have paralysed 
this country and convulsed the world. How 
much of a ripple did it produce in 1921 ? If 
economic power precedes political power, as 
it does, how much influence will a purely 
Labour Party exercise in politics ? 

The factor most destructive of progress to 
the Labour Party and most useful to the forces 
opposed to its legitimate aspirations is its 

170 



DISTRIBUTION OF PRODUCTION 

incorrigible abstraction from reality — an ab- 
straction which is quite probably the result, 
amongst other things, of generations of 
" religious " instruction specifically directed 
to the preaching of " other worldliness," and 
to that extent also an instance of the direction 
of Labour thought by financial influences. 
It is rampant in every sphere of Labour 
political action, from the lionising of Mr 
Greorge Lansbury, an honest citizen who would 
like to apply his conception of the Sermon on 
the Mount to the game of cut-throat poker, 
to the instantaneous success of Mr Tawney's 
title for his book. The Sickness of an Acquisitive 
Society. I have not read that book, which is 
doubtless excellent, but its title suggests that 
the average man ought to work with the 
specific object of not getting what he works 
for — goods ; a precisely parallel line of 
argument to that of the orthodox capitalist 
who insists that the major object of industry 
is to send goods away from those who 
made them, by export, or otherwise, so that 
" employment " may never fail. 
Put shortly, the psychology of the Labour 
171 



THE CONTROL AND 



Party is a psychology of failure. To be poor 
is to be virtuous ; to be well off is to be wicked ; 
and the objective of all action is to replace 
the wicked by the virtuous. As a result, the 
official Labour Party is almost irrevocably 
committed to a policy of attack, of levelling 
down, and is bound to be opposed, sooner or 
later, by everyone with any conception of the 
possibility of levelling up, as well as by those 
who have anything to lose. 

It is no pleasant thing to have to criticise 
that party. There was a period when organised 
Labour appeared to be the hope of the world, 
but that hope is now very dim ; not only from 
the causes just outlined, but because the power 
given to it by the circumstances of war has 
been dissipated. Not a single proposition of 
the capitalist system has been even challenged 
by it ; every strike has been a fight for position 
in the system, a claim either that the office 
boy ought to be General Manager, or at any 
rate ought to control the General Manager, 
combined with lurid threats to the firm's 
customers that, in the happy days to come, 
Labour would " larn " them what it was like 

172 



I 



DISTRIBUTION OF PRODUCTION 

to be an office boy. A very alluring pro- 
gramme. R.I.P. 

While the Labour Party has for all practical 
purposes devoted its attention to a mechanical 
and unreasoning claim to power on the grounds 
of virtue, the financiers have not been so 
immobile. So long as it was possible to keep 
the subject of credit away from public dis- 
cussion it was done, and done well. But 
merely negative opposition, in the nature of 
things, being bound to fail, a positive line of 
action has been elaborated and is now well 
under way — the exploitation of public credit 
for export purposes. Apart from the Ter 
Meulen and Mountain schemes, the Govern- 
ment {i.e. Zaharoff-Sassoon) proposals for 
dealing with " unemployment " are based 
fundamentally on an export credit scheme 
buttressed by relief works at home, the latter 
to be financed out of taxation. 

Now it is our contention that the use and 
control of credit is absolutely the vital issue 
of the present era. It is a force and can be 
used like other forces to destroy or to build, 
and it is quite possible that in this Government 
173 



THE CONTROL AND 



proposal we are faced with a real crisis in the 
history of civilisation. If it is put into force, 
we are committed to a line of action diametric- 
ally opposed to that urged in the pages of this 
book, and it is therefore vital that it should 
be understood. 

The proposal involves the pledging of public 
credit to the extent of (at first), say, £26,000,000. 
It should be particularly noted that Mr Lloyd 
George explicitly says : " It is not consumable 
goods of which the world stands in the most 
urgent need. What it stands mostly in need 
of is equipment to start its trade — machinery, 
transport ; and short credits are of no use when 
you are dealing with heavy goods of that kind. 
We have come to the conclusion ... it is 
desirable that we should extend credit for 
five or even six years (Hear, hear!)" — Times 
report, 20th October. 

That is to say, although the productive 
capacity of the industrial nations was so 
enormous that it overtook the wastage of a 
four and a half years' war in eighteen months, 
so that two and a half millions are unemployed 
in this country, and probably six millions in 

174 



DISTRIBUTION OF PRODUCTION 

America, the energies of the nation are to be 
employed, not in obtaining the maximum 
benefit from its existing plant, but in pro- 
ducing still more plant to be exported in 
competition with countries similarly situated. 

This £25,000,000, then, will be paid out in 
this country as wages, salaries and dividends, 
entirely unrepresented by any goods for which 
the general public has any demand whatever. 
The money so paid out, therefore, represents 
pure inflation, and, being unaccompanied by 
any method of dealing with prices, means the 
inevitable result of pure inflation — a rise in 
prices. In other words, the goods exported 
under these conditions are paid for by the 
general public through the agency of a general 
rise in prices, but not delivered to them, but 
the credits, if ever repaid, are repaid not to 
the general public, but to the banks who will 
finance these credits. And as at the same 
time these exports will be in fierce competi- 
tion with similar goods from, say, America, 
preparations for the coming war will naturally 
be accelerated. 



175 



Printed bt the Riverside Press Limited, Edinburgh 
Great Britain 



HB Douglas, Clifford Hugh 
171 The control and 

.7 distribution of production 
D7 



PLEASE DO NOT REMOVE 
CARDS OR SLIPS FROM THIS POCKET 

UNIVERSITY OF TORONTO LIBRARY